The remarks by Stephen Roach, former Hong Kong-based chair of Morgan Stanley Asia, in a Financial Times article on Feb 12, 2024, titled It Pains Me to Say Hong Kong Is Over, remind one of his equally erroneous prediction three years ago on the collapse of the US dollar. In June 2020, during an interview with business-news channel CNBC, he boldly declared: “The dollar is going to fall very, very sharply!” He forecast the greenback’s 35 percent drop against other major currencies. Today, it is regarded as the biggest joke in international financial circles.
Roach’s remarks seem to align with those made by commentators who toe the line of the US State Department in pouring out doom sayings on China and the Hong Kong Special Administrative Region to deter foreign investment.
Roach’s negative predictions about Hong Kong have drawn strong rebuttals from many quarters, including HSBC Group CEO Noel Quinn, who categorically stated that Hong Kong will continue to be a major international financial hub with a bright future.
In the face of widespread criticism, Roach attempted to water down his remarks in a follow-up article published in the South China Morning Post, claiming that they were an overstatement and had been intended as a “wake-up call”.
Indeed, his three arguments for why he believes “Hong Kong is over” are so weak that even a layman in economics like me can easily debunk his line of reasoning.
His most disappointing argument was his claim that the HKSAR has suffered a distinct loss of “political autonomy” since the implementation of the National Security Law for Hong Kong (NSL) following the monthslong anti-government protests in 2019-20. Roach mentioned that he had arrived in Hong Kong in the late 1980s. He had lived here long enough to know that there was no such thing as political autonomy or true democracy in Hong Kong under British rule, and that the queen appointed the governors without consulting the people of Hong Kong. He should also be aware of how Hong Kong’s economy and business environment were severely impacted by the city’s opposition forces for years, leading to delays in major infrastructure projects such as the Hong Kong-Zhuhai-Macao-Bridge and the new Hong Kong International Airport runway. Radical opposition legislators often engaged in filibustering to bring the Legislative Council operations to a standstill.
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Roach’s description of the “anti-government protests in 2019” as mere “protests” is misleading; they were full-blown riots with wanton destruction of public infrastructure facilities and private property as well as indiscriminate violence against innocent civilians and police officers alike, causing fear that engulfed Hong Kong for months. As expected, they have had a tremendous negative impact on all business activities. Compare that to the current state of calm and stability following the implementation of the NSL and the revamped electoral system based on the precept of “patriots administering Hong Kong”, which brought in an effective and productive Legislative Council. Does Roach not agree that Hong Kong’s prosperity can be achieved only through assured stability for business and safety for all? Most importantly, the international community and all Hong Kong residents should be doubly assured by Beijing’s recent assurance that the “one country, two systems” policy is set to continue indefinitely.
Roach’s negative predictions about Hong Kong have drawn strong rebuttals from many quarters, including HSBC Group CEO Noel Quinn, who categorically stated that Hong Kong will continue to be a major international financial hub with a bright future
Contrary to what Roach and other naysayers warned, the central government does not want to see Hong Kong become just another Chinese city. It wants the city to maintain its unique attractive features, which are the magnets that attracted investors and visitors alike.
His second argument revolves around what he perceives as the weakening of Hong Kong’s economic underpinnings because of “a protracted malaise” in the Chinese mainland economy. But is the mainland economy really in a dire state now? The mainland economy expanded by 5.2 percent in 2023, significantly outperforming the United States at 2.5 percent, the eurozone at 0.5 percent, and Japan at 1.9 percent. China is projected to contribute more than 30 percent of global economic growth. Many countries hold a positive view of China’s economy. For example, German direct investment in China reached a record high of 12 billion euros ($13 billion) last year. They are hard-nosed international investors who can see where the future lies. The chairman of BASF recently said that China is the largest chemical market where the company will continue to operate. China has also demonstrated its technological prowess by becoming the world’s leading producer of electric vehicles, renewable energy and 5G infrastructure. China’s economy is not weakening but instead evolving and expanding. Hong Kong should take full advantage by continuing its role as a gateway to the mainland.
Roach’s third argument was that Hong Kong is affected by the crossfire of the Sino-US rivalry. Indeed, Hong Kong is somewhat affected by the absurd “sanctions” the US has placed on individuals and trade as well as the “capital embargo” it has imposed. If Roach truly loves Hong Kong, as he claimed, he should condemn those “sanctions” that can cause harm to Hong Kong’s economic development.
Roach has disregarded some hard facts. The HKSAR government’s official data showed there were 9,039 overseas companies operating in Hong Kong in 2023, or 61 more than the number in 2022 and a record high; Hong Kong attracted 382 new overseas firms in 2023, including 48 companies from the United Kingdom, 34 from the US, 27 from Singapore and 13 from Australia. Drug giant AstraZeneca and Contemporary Amperex Technology, the world’s largest maker of batteries for electric vehicles, both announced last year that they will set up research and development centers in Hong Kong, taking advantage of the city’s status as the innovation hub in Asia. At the end of 2023, Hong Kong’s total bank deposits reached HK$16.22 trillion ($2.07 trillion), an increase of 5.07 percent. So, on what basis does Roach claim that companies are leaving Hong Kong en masse?
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Hong Kong’s talent attraction programs had received over 200,000 applications, with more than 120,000 of them approved, and more than 81,000 people have already arrived in Hong Kong, 30 percent of whom are now working in the financial sector. These programs contributed HK$34 billion in direct economic benefit to Hong Kong, equivalent to 1.2 percent of its GDP. One US investment bank has transferred half of the employees who had left during the COVID-19 pandemic back to Hong Kong. The HKSAR’s population increased by 30,500, or 0.4 percent, at the end of 2023. So, where was the talent exodus?
Roach also failed to see the immense potential of Hong Kong as the “superconnector” between the mainland and the rest of the world under the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area’s development strategy. He ignored the likelihood, and tremendous benefits, of Hong Kong joining the Regional Comprehensive Economic Partnership this year, which will massively enhance Hong Kong’s trading with Association of Southeast Asian Nations countries. He should read the financial secretary’s latest budget speech to appreciate the immense opportunities available to Hong Kong in the years ahead in areas like the digital economy, green finance and artificial intelligence.
In conclusion, Roach’s claim that “Hong Kong is over” is unsubstantiated and should be taken with a pinch of salt. Time will prove him wrong just as it did with Fortune magazine’s top Asia hand, Louis Kraar, who forecast “The death of Hong Kong” in his article published in Fortune magazine in 1995.
The author is an honorary HKU Space and Hong Kong Metropolitan University fellow and a Chinese Association of Hong Kong and Macao Studies council member. He retired from the Hong Kong Special Administrative Region government as a deputy commissioner of the Independent Commission Against Corruption.
The views do not necessarily reflect those of China Daily.
