Over the last few years, one of the most discouraging predictions about Hong Kong has been that as it loses its edge, the city will be overtaken by Shanghai and Singapore in the near future.
Some even say Hong Kong will eventually be reduced to a second-tier Chinese city.
But as China rolls out its “one belt, one road” initiative, some experts are saying Hong Kong still has a big role to play if it seizes the opportunity to jump on board this major development strategy.
“One belt, one road” was first announced by the Chinese government in 2013. It refers to the New Silk Road Economic Belt, which will link China with Europe through Central and Western Asia, and the 21st Century Maritime Silk Road, which will connect China with Southeast Asia, Africa and Europe.
Hu Xingdou, professor of economics at the Beijing Institute of Technology, said although the relationship between Hong Kong and the mainland has turned sour recently, both sides can still develop close economic and trading ties in the future, the Hong Kong Economic Journal reports.
As an international financial center, well-developed shipping hub and regional convention and exhibition center, with civic freedoms and the rule of law, Hong Kong won’t be easily replaced by other first-tier cities like Shanghai and Shenzhen, Hu said.
He is not the only expert that sees things this way.
Liu Cheng, an assistant researcher in the Hong Kong and Macau Affairs Office of the State Council, said in the March issue of Hong Kong Economic Journal Monthly there are three respects in which the mainland has to count on Hong Kong when implementing its Silk Road strategy.
When Britain colonized Hong Kong more than a hundred years ago, the empire had taken a fancy to the harbor city’s strategic location in the Asia-Pacific region.
Today, Hong Kong’s unique geographical location is as important as ever. The city serves as a great transit point that links the mainland with the countries belonging to the Association of Southeast Asian Nations (ASEAN).
In fact, Hong Kong businessmen have been investing in ASEAN countries for more than 50 years.
With its deep knowledge of the ASEAN business environment and culture and a long history of integrating with the global community, Hong Kong has the skill and knowledge to facilitate trade deals between China and countries belonging to groupings such as the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership.
It would be far better for Chinese companies to use Hong Kong as a springboard rather than try to venture into ASEAN on their own.
Hong Kong’s second major edge lies in its economic system.
The city has practiced capitalism forever. It has built up a strong business network with companies around the world. It also boasts a strong track record in dealing with western countries.
More than 4,000 multinational firms have set up an office or regional headquarters in Hong Kong, which is also home to a massive talent pool of professionals in various disciplines, such as finance, law, consultancy and accounting.
These professionals will be invaluable in negotiations related to the Silk Road plan or resolving international business issues, trade frictions and antitrust disputes.
Mainland firms have not had such a successful record so far in their overseas ventures.
Leveraging on Hong Kong’s strengths would considerably reduce their costs and risks as they try to expand overseas under the “one belt, one road” scheme.
Would Shanghai be more suitable in helping China to implement its grand plan?
In Liu’s view, Shanghai is still experimenting with its free trade zone; it has a long way to go before it is able to catch up with Hong Kong, which has a long history of robust law and an established economic system.
Last but not least, as the world’s third-largest financial center, Hong Kong has a lot to offer.
“One belt, one road” will need tons of money to become a reality.
China’s government has spearheaded several related funds in cooperation with bodies like the Asian Infrastructure Investment Bank and the BRICS New Development Bank.
Although neither of these institutions has set up its headquarters in Hong Kong, their operations cannot be successful without support and help from the city, Liu said.
Liu also thinks Hong Kong has an edge in the renminbi market as compared with Shanghai, Singapore and London.
Against Shanghai, Hong Kong is more open. Yet, unlike Singapore and London, Hong Kong is part of China, which will make it easier to control and safer when China eventually opens up its capital market to the world.
In conclusion, Liu suggests Hong Kong seize the “one belt, one road” opportunity to boost its competitiiveness.
The city has to show its strength by acting proactively, devoting itself to help build the foundation for China’s regional trade.
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