Published: 00:38, February 8, 2023 | Updated: 09:53, February 8, 2023
HK's role in nation's international economic and trade strategy
By Lau Siu-kai

Since the pursuit of reform and opening-up, the main goal of China’s international strategy is to promote modernization, maintain national security and enhance its influence in the world. Over the past decade or so, the United States and its Western allies have stepped up their efforts to contain China’s rise. To resist and counter their containment and “strangulation”, promote sustained economic growth, safeguard national security, and secure energy security, China has no choice but to formulate an aggressive and proactive international strategy and strengthen its ties with neighboring and friendly countries. 

In addition, due to the rapid growth of China’s production capacity, the original export markets, particularly Western markets, are increasingly unable to meet China’s export needs. Coupled with the rise of trade protectionism in various countries and the strenuous restrictions on China’s imports and exports by the West, China has no alternative but to find more overseas markets to promote economic development, while gradually reducing dependence on the US-led West in economics, trade, finance and technology. 

The advancement of the Belt and Road Initiative, the promotion of renminbi internationalization, the signing of the Regional Comprehensive Economic Partnership Agreement, the strengthening and expansion of the Shanghai Cooperation Organization, the increase in the number of BRICS (Brazil, Russia, India, China and South Africa) countries, docking with the Eurasian Economic Union created by Russia, the bolstering of economic and trade relations with the Middle East, India, Africa, Latin America and Pacific island countries, and the application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership are all important strategic initiatives.

From the perspective of Hong Kong’s long-term development and well-being, the city must accelerate its integration into the overall development of the country. Actively and closely coordinating and aligning Hong Kong’s development strategy with the country’s international economic and trade strategy is undoubtedly an important component in integrating into the overall development of the country.

The main content of China’s international economic and trade strategy is to promote “re-globalization”, mainly to accelerate regional globalization in Asia, establish a regional economic cooperation network that is beneficial to China, enhance China’s economic, trade, financial, technological, and cultural ties with Asian countries, and propel economic development of the entire Asian region. China will also deepen and expand its economic ties with Russia and some European countries. With this vast hinterland for economic development, China’s modernization can advance unabatedly and the country will garner a greater ability to deal with the containment, “decoupling”, isolation, and blockade of the US and its Western allies. 

In her new book The Globalization Myth: Why Regions Matter (2022), American scholar Shannon K. O’Neil demonstrates with a large amount of data that the extent and depth of globalization in the world have been overly exaggerated and hyped. Even in the era of the most rapid globalization, most of the economic exchanges, cooperation, and personnel exchanges among countries are still confined within three major regions (Europe, Asia, and North America). Today, Europe has the highest degree of economic integration and Asia is in the middle. North America has the lowest because the US economy is relatively “introverted”. What is important is that the degree of economic integration in Asia is constantly intensifying, and the signing of RCEP and the advent of China’s Belt and Road Initiative provide a strong impetus for it.

In this regional international economic cooperation driven by and to a great extent centered on China, there must be several cities in the region that can function as hubs to connect Asia, Russia and some European countries, continuously strengthening the scope and level of cooperation among countries and integrating them economically. Cities capable of serving as hubs usually have a superior geographical location, extensive international connections, superior business environment, free flow of capital, abundant talent supply, good communication and transportation networks, in corrupt and efficient administration, political stability, policy coherence and continuity, status as an international financial center, fair, reliable and especially common law-based legal and regulatory systems, complete high-end professional and other services, extensive use of English, good international reputation, and tolerance of diversity in cultures, lifestyle, religion and ethnicity. By these standards, Hong Kong has an advantage to serve as a hub in the Eurasian region. 

In his important speech at the ceremony marking the 25th anniversary of Hong Kong’s return to the motherland on July 1, 2022, President Xi Jinping pledged that “the central government fully supports Hong Kong in its effort to maintain its distinctive status and edges, to improve its presence as an international financial, shipping and trading center, to keep its business environment free, open and regulated, and to maintain the common law, to expand and facilitate its exchanges with the world.”

Under the tough new international situation, the central government should expect Hong Kong to leverage its advantages and characteristics to actively coordinate with the country’s international economic and trade strategy. Making new and important contributions to the country will also enable Hong Kong to develop sustainably and bank on development to solve its deep-seated economic, social and people’s livelihood contradictions. It will also enable the city to resist the increasing harassment by the US and the West.

Over the past period, Hong Kong has indeed done some work in strengthening exchanges with countries along the Belt and Road and in RCEP, but neither in terms of quantity nor quality can it meet the new needs arising from the constantly changing international and national situations. In the years to come, considering that the US and the West still enjoy huge financial, trade and professional services interests in Hong Kong, it is unlikely that they will “decouple” completely from the city. They will most likely continue to use Hong Kong as a channel to enter the mainland’s steadily opening market. Nevertheless, Hong Kong can no longer hope that the US and the West, which are headed for economic recession and increasingly self-protective, can be an important impetus for its economic development. Be that as it may, the US and the West will remain important to Hong Kong, and the city still needs to do its best to maintain and strengthen its relationship with them.

Undoubtedly and inevitably, for the long-term and sustainable development of Hong Kong, it must work hand in hand with the country to develop and strengthen economic, trade and financial ties with Asia, Russia and some European countries, build itself into an important hub in the Asian regional cooperation system, and serve the country’s international strategy by playing a coordinating role in integrating the economies of Asian countries. In short, Hong Kong must forge a new development strategy in response to the rapid and inexorable changes in the domestic and international situation. 

First of all, Hong Kong should work with the country to vigorously promote re-globalization at the international level, oppose all forms of protectionism, unilateralism and generalization of the concept of national security to impose economic, trade and financial sanctions on other countries, assist the country in promoting the reform of international trade and investment rules toward liberalization and facilitation, and support the building of a more equitable and reasonable global economic, trade and financial order wherefrom developing countries can derive more benefits. 

Second, with the support of the central government, Hong Kong should establish broader and closer economic, trade and cultural ties with the countries involved in the Belt and Road Initiative and in RCEP, including becoming a member of RCEP, especially in signing different cooperation agreements with those countries. The scope of these agreements and arrangements should encompass inter alia taxation, education, investment, professional services, legal arbitration, testing and verification, market access standards, mutual recognition of academic and professional qualifications, accounting, and auditing for the sake of promoting contacts in finance, investment, goods, services, personnel and culture. 

Third, Hong Kong should strive to become a more important financial center in Asia to meet the listing and financing needs of Asian companies. It should actively introduce funds from the Middle East and Southeast Asian countries. Regulations and policies for these purposes, including the promotion of Islamic finance, should be further developed. 

Fourth, the role of Hong Kong as the leading offshore renminbi business center in the internationalization of the renminbi should be greatly expanded and fortified. The main task is to enhance the role of the renminbi in Asian regional cooperation. 

Fifth, Hong Kong should strive to attract more Asian and European companies to set up offices, headquarters or logistics organizations in the city. Hong Kong should also attract more international organizations, particularly Asian bodies, to settle in the city and hold more international conferences and exhibitions there. 

Sixth, Hong Kong needs to establish more extensive and convenient transportation, communication, information and cyber connections with Asian and European countries. 

Seventh, Hong Kong must step up efforts to attract talent from Asian and European countries to work or settle in Hong Kong. Hong Kong must have elites from Asian and European countries who are familiar with the situation of Asian and European countries and can play a connecting role. At the same time, Hong Kong should strive to train local talents who are familiar with the languages, systems and development of Asian and European countries and import such talents from other countries. 

Eighth, Hong Kong’s education and training institutions need to enhance our students’ understanding of Asian and European countries and their importance to Hong Kong’s development. 

Finally, Hong Kong must strengthen its research on the conditions of countries involved in the Belt and Road Initiative and in RCEP, explore the opportunities they can bring to Hong Kong, and put forward practical policy recommendations for reference and adoption by the Hong Kong Special Administrative Region government and all sectors of society.

For Hong Kong to actively cooperate with the country’s international strategy, in addition to strengthening its ties with Asian and European countries, the range and depth of Hong Kong’s ties with the mainland must be further enhanced. Only in this way can the strengthening relationships between Asian and European countries and China be fully utilized by the city. The role of an important link between Hong Kong and the mainland will enhance Hong Kong as the preferred channel to enter China and encourage funds, enterprises and talents from Asian and European countries to come to Hong Kong. 

In the process of integrating into the overall development of the country, Hong Kong must not only develop extensive international connections and actively integrate into the overall development of the Eurasian region, but also broaden and deepen its ties with the mainland to speed up its integration into the overall development of the country. Only using a two-pronged approach can Hong Kong take on the major historical task of building a socialist modern country and achieving itself at the same time.

The author is a professor emeritus of sociology, the Chinese University of Hong Kong, and a consultant of the Chinese Association of Hong Kong and Macao Studies.

The views do not necessarily reflect those of China Daily.