When the British arrived in Hong Kong in 1841, they did not acquire the whole of Hong Kong in perpetuity. Hong Kong Island was ceded by the Qing Dynasty (1644-1911) to Britain in 1842 under the Treaty of Nanking; the Kowloon Peninsula was ceded to Britain in 1860 under the Convention of Peking; and the New Territories were leased to Britain for 99 years in 1898.
The continuation of British administration after 1997 (not only in the New Territories) would not have been acceptable to China in any form, since Hong Kong was acquired by the UK through what are considered to be unequal treaties.
Following the 1984 Sino-British Joint Declaration, in 1997 Hong Kong returned to China under the “one country, two systems” principle, ending a century and a half of British rule.
Hong Kong flourished under the British rule, becoming one of the world’s most important financial centers, and continued to flourish after the handover too, once it returned to China, to the point that Hong Kong has not lost its status as one of the world’s most important financial centers, and it has the potential to enhance its roles in the years to come.
Certainly, Hong Kong’s economy is transforming in many ways, adapting to new times, but this is what any financial center needs to do in order to catch up. In other words, Hong Kong does not need to rely only on its prowess in the services sector (mostly financial services); it must also embrace other opportunities to make its economy more dynamic, such as integrating into the Guangdong-Hong Kong-Macao Greater Bay Area, its role as a fintech hub, green finance and ESG hub, etc.
These past 27 years, Hong Kong went through the Asian financial crisis, SARS, the global financial crisis, and the COVID-19 pandemic without any evident significant outflow of capital and without diminishing its role as one of the world’s most important financial centers, despite certain bumps in the road. And this was so because of Hong Kong’s strength, because of its resilient nature.
Hong Kong is constantly showing that it has the potential not only to maintain its role as one of the world’s most important financial centers but to enhance it, thanks to its international role, expertise in the financial industry and related industries as well as tapping into newer industries like Web3, all this in the midst of Hong Kong’s involvement in the GBA and other relevant projects
A few months ago, a debate was started in Hong Kong on whether Hong Kong’s status as one of the world’s most important financial centers was over.
On June 18, the International Institute for Management Development (IMD), in Lausanne, Switzerland, ranked Hong Kong fifth globally in its World Competitiveness Yearbook 2024, up from seventh place last year, out of the 67 economies surveyed in the annual ranking of the world’s most-competitive economies.
The IMD, which has published its rankings since 1989, rated Hong Kong’s economic performance at 11th, up from 36th in 2023, while its international trade took the coveted first position. The IMD also ranked Hong Kong third for governmental efficiency, seventh for business efficiency, and ninth for infrastructure.
These results are certainly remarkable and a clear example of Hong Kong’s resilience.
While Hong Kong has been through some rough years, its attractiveness has not diminished at all, to the point that the city remains one of the world’s most important financial centers. Even though many people all over the world nowadays associate Hong Kong with finance, the truth is Hong Kong excels in many more areas, such as arts and leisure, culture, excellent facilities, infrastructure, and low crime rates, which makes it a very attractive location.
Indeed, the removal of pandemic restrictions has seen the livability of Hong Kong improve over the past 12 months, remaining in the 10 most livable Asian cities as per the recently released annual Location Ratings Report from global mobility expert, ECA International, ranking 77th globally.
Furthermore, Hong Kong is trying to attract many new family offices. According to a Deloitte study commissioned by the Hong Kong Special Administrative Region government, the city had over 2,700 single-family offices as of the end of 2023. To qualify, each office must manage at least $10 million, and 885 of them had at least $100 million in assets.
Hong Kong also ranks very highly in finance matters, according to other organizations. For example, Hong Kong maintained fourth place in the 35th edition of the Global Financial Centers Index, released by China Development Institute and Z/Yen Group in March. Hong Kong was one of two Chinese cities in the top 10, alongside Shanghai, which ranked sixth.
The city is also an innovation hub, as was demonstrated by the Global Innovation Index 2023, published by the World Intellectual Property Organization, which ranked the Shenzhen-Hong Kong-Guangzhou science and technology cluster second globally for four consecutive years: Hong Kong’s ranking remained fifth in Asia and 17th globally among 132 economies. Hong Kong continued to perform well in the Innovation Input subindex, at eighth globally. Its ranking in the Innovation Output subindex improved to 24th.
Hong Kong’s GDP growth is forecast to ease to an average of 2.3 percent in 2025-28. Despite the negative external economic circumstances, Hong Kong has had a not-too-bad 2023 and is expected to have a better 2024, which will see the city consolidate its status as an international financial center.
Furthermore, Hong Kong is currently celebrating many top-notch global events. A few months ago, Hong Kong held the Sevens rugby tournament, for the final time at the Hong Kong Stadium. From 2025, the tournament will be held in a new 50,000-seat venue at Kai Tak Sports Park. This year’s Sevens, running Friday through Sunday in the first week of April, with some of the strongest attendance from the United Kingdom, Australia and Fiji, showed that Hong Kong is regaining the momentum it had before the pandemic, if not increasing it.
Many international conferences are also being celebrated in Hong Kong. Actually, as per Financial Secretary Paul Chan Mo-po’s budget for the 2024-25 fiscal year delivered in late February, it was announced that the government would earmark HK$1.09 billion ($139.5 million) to boost tourism.
Hong Kong FinTech Week is not the only event that attracts many visitors to Hong Kong every late October/early November, but other major events like the WOW Summit were recently celebrated, as well as the HSBC Global Investment Summit held in April, which created a platform for participants to better understand the opportunities and issues in financial markets.
Moreover, Hong Kong now is embracing opportunities from the GBA development, and, by playing a proactive part in China’s 14th Five-Year Plan (2021-25), the HKSAR is unleashing its potential thanks to unreserved support from the central authorities for advancing key strategies to upgrade its “superconnector” role, including the digital yuan (digital renminbi) and environmental, social and governance.
In addition to the huge role that the GBA will play in Hong Kong’s future, we can also mention other opportunities such as fintech development, the HKSAR’s anticipated entry into the Regional Comprehensive Economic Partnership, and the Connect programs.
Fintech-wise, Hong Kong and the rest of the GBA are increasing their role as fintech hubs. The Fintech 2025 blueprint aims at pivoting the HKSAR toward a friendlier regulatory regime for digital assets, proving that the city is positioning itself to become a virtual assets center/crypto hub.
To sum up, Hong Kong is constantly showing that it has the potential not only to maintain its role as one of the world’s most important financial centers but to enhance it, thanks to its international role, expertise in the financial industry and related industries as well as tapping into newer industries like Web3, all this in the midst of Hong Kong’s involvement in the GBA and other relevant projects. The long-term development of Hong Kong within the GBA blueprint as well as within the national development strategy requires a multifaceted approach.
In many ways, Hong Kong looks as good as it did in 1997 or even better.
The city will weather the inevitable near-term turmoil, but it will fare much better in the longer term because both the central and Hong Kong governments have made unequivocal commitments to its better future.
The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.
The views do not necessarily reflect those of China Daily.
