Hong Kong is not the place to bet against

Oct 28, 2022
Hong Kong, China city skyline from Victoria Peak at dusk.

It is fashionable in some circles to say Hong Kong is finished because it is now just another Chinese city with diminishing attractiveness for “global” attention.

This view is strongly held by those who see China has a limited future because they believe the Chinese system will be unable to go much further without fundamental reform to become “democratic” like in Europe and North America.

Along this line of thinking, Hong Kong’s development too will be compromised. As a free-wheeling British colony, it was interesting to the “West” because it was a Westernised outpost in the “East” that enabled the “West” to do business with China and Asia.

Now that Hong Kong is fully a part of China, its romanticism is gone. This view is buttressed by the fact that local families are migrating to Britain in large numbers once the former colonial power opened its door to them. Britain did so in 2020 because it offered a “route” out of Hong Kong for those who desired to leave after the passage of a new security law.

We are an honest lot in Hong Kong. We know things have changed under Chinese sovereignty and some people are uncomfortable with the change.

Hong Kong today is not the Hong Kong of yesteryear. While we do miss aspects of the past because it was our past, it does not mean we dislike the present, we have no faith in our future, or we cannot accept we are part of the People’s Republic.

Has Hong Kong become a basket case of governance? Is it a “police state” to be feared, as claimed by some folks who have left Hong Kong?

The answer is no. Hong Kong remains a thriving society with our fair share of challenges that we wish to overcome.

What is clear is the world is shifting gears from one dominated by the Anglosphere to one of greater diversity. Everyone must cope. China too must engage with the world – which it is doing – even though somewhat awkwardly at time.

However, it is perhaps most difficult for those who once held sway over others because their ways of doing things were once considered “superior”.

Political systems are manmade constructs – not laws of nature – on how to deal with power and the decision-making of the powerful. Systems need fine-tuning or even reform. This is a worthy subject for all systems. To reduce this topic down to “democracy vs. autocracy” is simplistic and unhelpful.

It is a great pity that Hong Kong threw away the chance to elect its chief executive by universal suffrage when Beijing made the offer in 2014. Even though there would be a nominating process to filter out people Beijing could not accept, one-person-one-vote would have changed the dynamics of politics in Hong Kong in which the head of the city has to face the public.

The offer was made after many years of pushing in Hong Kong for greater democracy, but it was rejected by “democrats” some of whom have now left the city. For now, electoral reform is off the table for Hong Kong. However, performance legitimacy is what our leaders need to live up to.

Performance is the lens Hong Kong people will judge its government through. It is in this context that we can assess John Lee’s new policy address delivered on 19 October.

What is obvious is that Hong Kong remains a fortunate place. The city is still able to pay for many improvements without having to borrow, like many other economies are having to do. This includes economies in Europe and North America, which are now saddled with very heavy debts that future generations have to repay.

Lee’s policy address contains a massive 300 sq km area in the northern part of the city that is to be redesigned into a metropolis for more housing for greener living that will at the same time offer jobs in new technology parks, as well as to provide space for a re-industrialised economy with stronger R&D and commercialisation capabilities. Products could then be made across the border in mainland China for the Chinese and global markets.

Let’s not forget Hong Kong is located right next to Shenzhen – China’s tech city – and Guangdong Province. Shenzhen’s GDP is now larger than Hong Kong’s, and Guangdong’s GDP is larger than 90 per cent of countries around the world, and the highest in China among provinces.

In other words, Hong Kong is in a thriving neighbourhood, next to a giant economy that is already quite prosperous. Both Shenzhen and Guangdong have healthy economies and the ability to invest in their own development and advancement.

The Chinese vision for this region, referred to as the Greater Bay Area (GBA) that also includes Macao, is that their economies become further integrated to provide the synergies needed to power ahead.

Whatever the West thinks of “China”, the Chinese consider the GBA to be well-organised and capable of helping to push the nation’s overall development, including Hong Kong’s role to raise capital. Hong Kong and the GBA remain an attractive spot for Chinese talent.

China is facing strong headwinds blowing from the United States to contain its tech sector with chips and semiconductors being the poster child. Chinese talent now working overseas are feeling the heat, and the GBA may well provide an alternative base.

While we know the battle is tough and it is not just affecting China but many other economies too, we don’t know how things will shake out. Lee’s policy address puts billions of dollars of work on the table that could be attractive to global talent who are not uncomfortable with “China”.

Hong Kong already has a large pool of diverse talent in urban design, architecture, engineering, and construction. The many local and international companies operating in Hong Kong also have many projects on the mainland and the Asia-Pacific region. Indeed, their markets now stretch to the Middle East. They can help to bring more professionals to Hong Kong to manage the new projects.

These projects must be technologically advanced, as Hong Kong has already committed to achieving carbon neutrality by 2050. The Hong Kong government has put forward a HK$30 billion investment fund and has included new energy as the sort of thing it is looking to invest in. Lee thinks it will incentivise mainland and overseas private money to invest in enterprises into which the government also invests.

Lee may well be right. Considering the kinds of projects in his policy address, investments in prop-green-smart tech fits not only Hong Kong’s needs but they have potential for other highly urbanised cities too. Moreover, Hong Kong is already competitive in biotech. Lee’s suggestion to invest in primary healthcare is the right way forward and this too provides worthy investment opportunities.

In our highly troubled world with war in Europe, high inflation worldwide, and an energy crisis, Hong Kong remains a fortunate place with serious plans to implement in the near-term. Hong Kong is not the place to bet against.

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