When discussing economic development in recent years, it is inevitable to consider the geopolitical impact. I believe economic problems caused by geopolitics must be addressed with geopolitical thinking, rather than relying solely on conventional economic theories or measures as countercyclical fiscal policies. Conventional approaches could hardly deal with the impact of geopolitics on economic development.

For instance, Western media and government officials have continuously denigrated the national security laws implemented in Hong Kong, aiming to undermine the city’s economic prospects and overall well-being. It is intended to deter foreign investors and professionals from coming to Hong Kong. This is a kind of self-fulfilling-prophecy tactic.

In countering such slanderous claims, we must highlight the positive effects of safeguarding national security on economic development and business operations. It is precisely because of the safer and more stable business environment ensured by the national security laws that investments, whether from the Chinese mainland or overseas, enjoy better protection in Hong Kong. The laws have put an end to political wrangling and kept subversives at bay, creating a more favorable business environment.

A number of media reports had suggested that Switzerland, a preferred tax haven because of its low tax levels and privacy laws, had been under pressure from the United States to disclose US clients’ account details to the US tax authority since the 2008 financial tsunami. Eventually, on Feb 14, 2013, Switzerland signed an agreement with the US, requiring Swiss banks to disclose information of their US accounts to the US tax authority. 

This arrangement is believed to have weakened Switzerland’s status as a tax haven. By 2023, with concerns about systemic risks in the US financial system increasing, international capital started to gradually shift to places like Singapore and Hong Kong. Furthermore, since Russia’s occupation of Crimea in 2014, and especially after the outbreak of the Russia-Ukraine conflict in 2022, fears of asset seizures by the US have plagued the super-rich from Russia and many other countries. These are unprecedented interferences that have a profound impact on financial markets, capital flows, and private property rights.

International investors, especially the super-rich, are less concerned about investment opportunities than financial secrecy, stability of property rights, sustainability of inheritance, and the security provided by the rule of law

International investors, especially the super-rich, are less concerned about investment opportunities than financial secrecy, stability of property rights, sustainability of inheritance, and the security provided by the rule of law. Can the Hong Kong Special Administrative Region government take advantage of this pain point and promote the idea to international investors that they enjoy better protection of private property rights in Hong Kong under the city’s comprehensive legal system, including the national security laws? 

Although the interference in global financial markets and systems stemming from geopolitics is unprecedentedly significant, it does not mean that we cannot navigate through it. To give an imperfect example, despite being embroiled in continuous warfare and facing increasingly intense criticism from the global mainstream media, Israel has still experienced significant growth in private investment, corporate mergers, and the establishment of new startup funds. Hong Kong is in no way in a worse situation, because of geopolitics, than Israel. Therefore, the key lies in being proactive and targeted.

In a written response to legislators on April 24, the HKSAR government mentioned that there were 64 family offices being assisted by a dedicated team in the process of setting up or expanding their businesses in Hong Kong, and 136 family offices having expressed their intention to do so. 

According to PricewaterhouseCoopers Taiwan, there were approximately 7,500 family offices globally by 2023. According to Deloitte China’s estimation last month, the number of family offices operating in Hong Kong is expected to exceed 3,000 this year, far surpassing our competitors. Of course, the numbers of family offices cannot be directly compared; the total amount of assets under management, the wealth effect, and the economic multiplier effect are much more significant indicators. 

Nevertheless, Hong Kong’s achievement in attracting a big number of family offices is still commendable. It is hoped that further efforts will be made by the HKSAR government to expand the ranks. Moreover, as this year is an election year globally, and the global political situation, especially in the US, is unpredictable, we should make extra efforts to navigate the precarious global political and economic landscape. Despite anticipated bumps on the road, Hong Kong’s future remains bright.

The author is a member of the Legislative Council of the Hong Kong Special Administrative Region.

The views do not necessarily reflect those of China Daily.