It is also worth noting that Shenzhen has placed ninth in the general ranking, climbing two spots, and has also been rated as the world’s third-largest fintech center, showing that the Guangdong-Hong Kong-Macao Greater Bay Area has huge potential in general and as a fintech hub in particular.
A Hong Kong Special Administrative Region government spokesman stated that the report clearly affirms Hong Kong’s status and strengths as a leading global financial center.
Hong Kong’s scores were rated among the top in various areas of competitiveness, including business environment, human capital, infrastructure, and reputational and general. Hong Kong’s rankings in various financial industry sectors also rose significantly, including investment management, insurance, banking and professional services. Among them, the ranking in investment management advanced to first globally. In addition, the report assessed the financial centers’ fintech offerings, and Hong Kong’s ranking rose five places to ninth globally.
The spokesperson also noted that Hong Kong’s asset and wealth management business is booming, with assets under management growing by about 2 percent from the previous year to more than HK$31 trillion ($4 trillion) by the end of 2023.
Net fund inflows reached HK$390 billion, representing a year-on-year increase of over 3.4 times. The development of the family office business in Hong Kong continues to gain momentum. The New Capital Investment Entrant Scheme has continued to receive overwhelming responses since its launch in March, with more than 550 applications received so far. It is expected to bring in more than HK$16.5 billion in investments to Hong Kong.
This is certainly great news for Hong Kong, not only because it means that Hong Kong has overtaken Singapore, but mostly because the timing could not have been better. Indeed, a few months ago a debate started in Hong Kong on whether the city’s status as one of the world’s most important financial centers was over or not.
As I have mentioned in previous articles, Hong Kong rode out the Asian financial crisis, SARS, the global financial crisis, and the COVID-19 pandemic without losing its role as one of the world’s most important financial centers. And this was so because of Hong Kong’s strength and resilience.
In other words, initiatives — such as making Hong Kong an important greentech and Web3 hub, and developing the city’s potential in the area of central bank digital currencies — are one of the key reasons why Hong Kong remains and will continue to be one of the world’s most important financial centers and the gateway to the Chinese mainland.
Hong Kong is also part of the GBA, which undoubtedly enhances the city’s potential, and vice versa.
Indeed, Hong Kong now is embracing opportunities from the GBA’s development, and, by playing a proactive part in country’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 and environmental, social and governance.
In this sense, financial cooperation between the HKSAR and the rest of the GBA is increasing daily and will without doubt become key. From the beginning, the GBA has brought together the two special administrative regions of Hong Kong and Macao plus nine municipalities in the Guangdong province.
The GBA has a combined population of over 69 million people and a GDP of around $1.5 trillion (comparable to that of the Tokyo Bay Area and the New York Metropolitan Area). It has been described by some media as “China’s plan to beat Silicon Valley”. Suffice it to say that the Chinese government never skimps on expense when it comes to big projects that will bring prosperity to the country.
As per the 11 chapters of this project, each of the cities will play an important role based on their respective strengths. For example, Hong Kong will play a key part as a financial center, while Shenzhen, home to cutting-edge technology companies like Huawei and Tencent, will leverage its technological prowess.
Why is the GBA important for Hong Kong? While Hong Kong profits from being the gateway to the Chinese mainland, this role will diminish as the mainland further opens up its economy and financial system, making it progressively easier for foreign investors to make direct contact without going through a middleman. Thus, it would be wise for Hong Kong to diversify its economy as much as possible. It must therefore grab hold of any opportunity to do so. And the GBA is just the ticket for the many good opportunities it offers.
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 in Hong Kong, the HKSAR’s anticipated entry into the Regional Comprehensive Economic Partnership, and the various Connect Schemes.
Fintech-wise, Hong Kong and the rest of the GBA are increasing their roles 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.
In addition to this, focusing on artificial intelligence (AI), as I explained in my article HK, Mainland AI Industries Benefit From Cooperation (China Daily Hong Kong Edition, May 16, 2024), Hong Kong can enormously benefit from the Chinese mainland’s strong AI industry, while the mainland can also benefit from Hong Kong’s. The special administrative region has a key role to play in China’s AI development.
To sum up, the recent GFCI ranking shows that Hong Kong not only remains one of the world’s most important financial centers, but that it has the potential to enhance its position, thanks to the city’s international role, expertise in the financial industry and related industries, and its tapping into newer industries like Web3. All this in the midst of Hong Kong’s involvement in the GBA and other relevant projects, since, as we saw in the ranking, Shenzhen is fast rising to become one of the world’s most important financial centers and fintech hubs. The long-term development of Hong Kong within the GBA blueprint as well as within the national development strategy requires a multifaceted approach. Hong Kong certainly is not over; it is just adapting to different times.
The author is a fintech adviser, researcher and former business analyst for a Hong Kong publicly listed company.
The views do not necessarily reflect those of China Daily.
