Yang Sheng says the doomsayers who foolishly predicted the demise of Hong Kong need to eat a large slice of humble pie

Over the years, Hong Kong has been running neck-and-neck with Singapore in the race for dominance in international financial services. It really is not a big surprise that the Hong Kong Special Administrative Region overtook Singapore and regained third place in the latest global ranking of international financial centers, after a hiatus of more than two years.

That said, swapping places with Singapore in the latest edition of the semi-annual Global Financial Centres Index is still something worth celebrating, and is much more momentous for Hong Kong than for the Lion City — in the sense that the HKSAR’s upward move, supported by a plethora of objective assessments by several reputable institutions, completely disproves all the doomsayers as well as the “business advisory” issued recently by various departments of the United States government.

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The index report, released on Tuesday by London-based think tank Z/Yen Group and Shenzhen-based think tank China Development Institute, is based on a global online questionnaire and uses some 100 instrumental factors provided by third parties including the World Bank, The Economist Intelligence Unit, the OECD and the United Nations.

Granular ratings showed that Hong Kong achieved top place in various competitive areas such as “business environment”, “human capital”, “infrastructure”, and “reputational and general”.  

The city’s top-notch rating in “business environment” is a sharp slap in the face to the US government whose “Hong Kong business advisory” warned about “risks” because of the implementation of national security laws in the city, claiming that these laws “erode fundamental freedoms and protections for human rights in Hong Kong”.

How a place with compromised fundamental freedoms and human rights could have provided an outstanding business environment is beyond common sense and all known economic theories. Only the US officials who came up with the “Hong Kong business advisory” have the answer.

It goes without saying that an outstanding business environment cannot come about when the rule of law does not prevail, and when fundamental freedoms and human rights are not sufficiently protected.

The narratives of the US “Hong Kong business advisory” do not tally with the facts that Hong Kong has ranked fifth in the 2024 World Competitiveness Ranking, an index produced by the business school International Institute for Management Development, and that 76 percent of the members of American Chamber of Commerce in Hong Kong regarded the city as a competitive business hub according to its 2024 Members Business Sentiment Survey Findings Report.

Intriguingly — notwithstanding that in July 2021 the US started issuing “business advisory” warnings to multinational firms about the “risks” of doing business in the city because the National Security Law for Hong Kong had been promulgated in June 2020 — Hong Kong became the fourth-largest recipient of foreign direct investment in the world in 2023, according to the World Investment Report 2024 of the United Nations Conference on Trade and Development.

In effect, businesses have sniffed at Washington’s repeatedly issued “Hong Kong business advisory” and the over-hyped “risks”.

Businesses are notoriously risk-averse; they prioritize risk aversion over profits in general. The fact that businesses and investors have continued to pour their precious capital into Hong Kong, that the city regained third place in the global financial center ranking, and that it continues to be ranked among the world’s most competitive economies suggest that the US has pulled its “Hong Kong business advisory” from thin air, serving only its geopolitical strategy against China by undermining the special administrative region’s economy with scaremongering tactics.

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It is also noteworthy that both Hong Kong’s and the Chinese mainland’s stock markets surged on Tuesday and Wednesday morning. Earlier this year doomsayers predicted the demise of Hong Kong. Stephen Roach, former chair of Morgan Stanley Asia, in particular, floated the notion that “Hong Kong is now over”, citing “the world’s worst-performing major stock market over the past quarter of a century” as part of his argument, and asserting that “the market has always been emblematic of success”.  

In reality, stock markets around the world, including that of Hong Kong and the mainland, have increasingly been driven by the flow of liquidity, rather than by economic fundamentals. The global flow of liquidity in turn has been significantly influenced by the policies of US Federal Reserve, the Russia-Ukraine and Israel-Hamas conflicts, and Washington’s geopolitical strategy against China, which partly explains the poor performance of Hong Kong and the mainland’s stock markets over the past few years. Yet, market dynamics are changing since the Fed started its new interest-rate easing cycle last week, and US-China rivalry is showing signs of change. China’s monetary and regulatory authorities pulled the trigger for the current surge in the Hong Kong and mainland stock markets by announcing a batch of unprecedented stimulus measures on Tuesday. Is Roach holding his breath watching the miraculous rebound in the Hong Kong and mainland stock markets?

The author is a current affairs commentator.

The views expressed do not necessarily reflect those of China Daily.