Business

Hong Kong's Future in China

By Sean Nelson

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 Anyone reading the international business pages for the past few years has to have gained some idea that in Hong Kong there is a fear that while high rates of economic growth are likely to continue into the foreseeable future as Hong Kong further integrates into mainland China's economy, Hong Kong will be surpassed as a major economic hub and enter a period of relative decline compared to other cities in China and in Asia in general. Once known as the "Gateway to China," Hong Kong has become, in the words of Chietigj Bajpaee of the Center for Strategic and International Studies, "China's gateway to the world as Chinese companies list in Hong Kong as a potential precursor to listing in New York or London." Although the Hong Kong stock market has passed the 30,000 mark as of late, mainland China's economic growth means that major Chinese cities, especially Shanghai, could far surpass Hong Kong in economic importance within both China and Asia. Shanghai's Yangshan port near Pudong has caused Shanghai's importance in the international shipping sector to grow. It was the shipping industry that first made Hong Kong rich. Guangzhou's Baiyun Airport, located only an hour away from Hong Kong, now competes with air travel in Hong Kong. Nearby Shenzhen boasts a major industrial and manufacturing base, as well as financial trading and services. In addition, the other former colony that saw sovereignty over it passed from a European country to China in the 1990's, Macao, has become a more popular tourist destination for those visiting southern China.

As such, one could easily conclude that Hong Kong has two contradictory choices before it if it is to remain an international city on its own terms: either further integrate into China or reach out more to the outside world. Political leaders and entrepreneurs have made the right choice: both. Planning is now underway to transform Hong Kong and Shenzhen into "a twin-city financial, trade and shipping hub," according to Olivia Chung of Asia Times. Greater economic integration plans include bringing their financial institutions and stock exchanges closer together through greater cooperation, upgrading transportation links between the cities and creating a Shen(zhen)-(Hong) Kong Innovation Rim.

At the same time, Hong Kong is pushing to increase business ties with parts of the world that historically have done little business with Hong Kong. The Securities and Futures Commission (SFC) in Hong Kong just announced it had allowed the creation of Hang Seng Investment Management Ltd.'s Hang Seng Islamic China Index Fund. This signals that Hong Kong is going to be more involved in business ventures with the entrepreneurs throughout the Muslim world, especially with Middle Eastern firms and investors. Islamic investment worldwide is estimated to be worth about US$1 trillion and to grow at about 15% per year, meaning it is wise of Hong Kong to take advantage of this opportunity.

Ironically, just as Hong Kong is set to become more Chinese as it re-integrates with the mainland, China has become more international. On the one hand, the number of Hong Kong men who marry mainland Chinese women has been rising quickly since the handover in 1997. Marriages between a native of Hong Kong and a mainland Chinese spouse now account for 35% of all married couples in Hong Kong. On the other hand, Chinese cities, most famously Shanghai, are both importing and exporting international cultural products and becoming major international financial centers.
 While confidence can easily morph into arrogance, the people of Hong Kong should be able to move into the future with confidence in their city. Hong Kong is not going to stop being Hong Kong just because it economically and socially integrates into the mainland. It has the right economic fundamentals to remain an international city and a major financial center far into the future. The peoples of mainland China and Hong Kong have much to offer each other. Just because mainland China rises does not mean Hong Kong will have to lose its luster.

Vocabulary:
Hong Kong: 香港 xiāng gǎng
Macao: 澳门 ào mén
Shanghai: 上海 shàng hǎi
Shen Zhen: 深圳 shēn zhèn

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