While US trade protectionism batters the global economy and disrupts financial markets, the Hong Kong Special Administrative Region’s economy stands out as a resilient bright spot in the world, as indicated by recently released statistics.
In the first quarter of 2025, Hong Kong’s real GDP grew by 3.1 percent year-on-year, much higher than the 2.5 percent in the previous quarter. While private consumption dipped slightly by 1.2 percent, other indicators were much more robust: Service exports rose 6.6 percent; total investment spending increased 2.8 percent; and the Hang Seng Index has climbed around 21 percent (as of June 11) over the past five months, with the daily turnover volume in April significantly higher than the average level of the past five years. Residential property transactions also rebounded, with the April volume surpassing the five-year average. Meanwhile, unemployment remains low, inflation is moderate, and wages for full-time workers continue to improve.
These data suggest that Hong Kong’s economy is regaining momentum. Investor confidence is returning, becoming a key engine of growth.
This sustained economic recovery has prompted some naysayers to retract their previous doomsaying about Hong Kong. In early 2024, Stephen Roach, former chairman of Morgan Stanley Asia, declared “Hong Kong is over”, citing its “closer ties” to the Chinese mainland, structural issues in the mainland economy, and US-China tensions. More recently, however, Roach openly admitted he was “shocked” by Hong Kong’s recovery, calling it a “revival”. Such reversals demonstrate the city’s dynamic economic resilience.
To analyze Hong Kong’s economic performance in the first quarter, it is worthwhile to compare it alongside the mainland’s. In both the fourth quarter of 2024 and the first quarter of this year, the mainland economy maintained relatively robust growth at 5.4 percent — a leading pace among major economies globally. The services sector grew by 5.3 percent year-on-year in the first quarter, or 0.3 percentage points higher than 2024’s full-year growth. These improvements followed the central government’s decisive policy to stabilize markets and boost consumption.
When the United States launched a tariff battle against the world, roiling global markets in April, equities in both the mainland and Hong Kong defied predictions of impending doom by climbing steadily. Obviously, both the mainland and Hong Kong economies have withstood this “stress test”, and demonstrated resilience — much to the surprise of many Western economists.
Clearly, the economic stability and prosperity of the HKSAR are closely and inextricably tied to those of the mainland.
The ongoing US-China competition continues to affect Hong Kong across multiple dimensions, and Beijing’s counterstrategies also have significance for the HKSAR. Since 2018, the central government has diversified its international strategy, deepening ties with the Association of Southeast Asian Nations, the Middle East, and countries participating in the Belt and Road Initiative. Hong Kong has proactively followed suit — Chief Executive John Lee Ka-Chiu’s recent overseas delegations secured key agreements and attracted substantial Middle Eastern capital.
Two notable recent developments further highlight Hong Kong’s changing economic dynamics. First, there is a surge in mainland consumer companies pursuing an initial public offering in Hong Kong. Since September 2024, 14 such firms have listed in Hong Kong — more than double the total for 2023. Policy support and the solid performance of consumer stocks in the Hong Kong stock market have made it an increasingly attractive listing destination for consumption-related firms.
Second, China is actively stimulating domestic consumption through major consumer expos. The inaugural Good Living Expo 2025, co-hosted by leading tech and e-commerce firms, will take place in Beijing this month. This will be the fifth major expo on the mainland specifically themed around boosting consumption — evidence that expanding domestic demand has become not only policy consensus but concrete action.
Hong Kong’s economic recovery is encouraging, but resting on its laurels is not an option for the city. It must innovate boldly and decisively in order to surf its way through global headwinds and transform challenges into opportunities
These trends highlight Hong Kong’s need for strategic recalibration when it comes to boosting consumption and the retail sector. Long reliant on attracting mainland visitors seeking international goods, Hong Kong is now seeing dwindling interest from these shoppers — while more and more of its own residents are heading north to spend across the border. In response, Hong Kong must pivot: Divert part of its efforts toward attracting global consumers to purchase mainland products here in Hong Kong.
While Hong Kong cannot compete with the mainland on price, the city enjoys unique advantages. Notably, Hong Kong is now the world’s second-largest wealth management hub and could surpass Switzerland by 2027-28 to become the global leader according to a forecast by Swiss bank UBS. Statistics from the HKSAR government show the city currently hosts over 2,700 single-family offices, more than half of which were established by ultrahigh-net-worth individuals with assets exceeding $50 million.
The family-office business has become a vital segment of private wealth management. The city’s simple tax regime, low tax rates, and alignment with international best practices in regulation and commercial standards make it an ideal place for family offices to establish operations.
This concentration of wealth brings enormous potential for high-end consumption. Expanding this sector — luxury retail, fine dining, premium healthcare, cultural experiences, and upscale housing — not only offers strong profit margins but also creates significant employment.
In summary, Hong Kong’s economic recovery is encouraging, but resting on its laurels is not an option for the city. It must innovate boldly and decisively in order to surf its way through global headwinds and transform challenges into opportunities.
The author is vice-chairman of the Committee on Liaison with Hong Kong, Macao, Taiwan and Overseas Chinese of the National Committee of the Chinese People’s Political Consultative Conference, and chairman of the Hong Kong New Era Development Thinktank.
The views do not necessarily reflect those of China Daily.
