Published: 10:10, April 2, 2024 | Updated: 13:01, April 8, 2024
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Time for HK to refocus on economic development
By Tu Haiming

With the Safeguarding National Security Ordinance taking effect on March 23, coupled with the National Security Law for Hong Kong, the special administrative region can finally put aside its national security concerns and refocus on economic development. As I see it, the city can focus on the following aspects:

First, the city must strive to secure its status as an international financial center, which is a hard-earned asset built over several generations and one of the key pillars of Hong Kong’s economy. As to how to maintain and bolster its standing, we must first analyze what factors are crucial to the creation of an international financial center. 

Financial services cater to the needs of real economies, with the world’s prominent financial centers all being underpinned by huge economic hinterlands. The New York financial center is backed by the North American market; London’s is backed by the European market; and Singapore’s is supported by the Association of Southeast Asian Nations market.

Hong Kong’s international financial center has been built on two major factors — the need for financial services from the massive Chinese mainland market and the city’s free-port policy. By now mainland enterprises account for over 70 percent of Hong Kong’s total stock market value, and the city is also the largest source of foreign investment for the mainland. As a free market featuring a fully convertible Hong Kong dollar, unrestricted capital flows and a sound financial regulatory system, Hong Kong provides a free and safe environment for enterprises to raise and manage their funds. Hence, many foreign enterprises choose to set up production lines and marketing centers on the mainland, conducting their financial activities in Hong Kong.

In striving for economic development, Hong Kong must dedicate itself to enhancing both its physical and institutional connectivity to transform itself into an international hub

Although Hong Kong’s financial market has encountered setbacks in recent years, crucial factors such as the massive mainland market and Hong Kong’s unrestricted capital flows remain unchanged. Therefore, the city’s status as an international financial center remains solid.

Despite Washington’s efforts to instigate or drive foreign investors to flee Hong Kong and the mainland, hundreds of business leaders from international associations and multinational corporations attended the China Development Forum 2024 in Beijing last month. In response to media questions, Tim Cook, CEO of Apple Inc, gushed, “I love it here, I love the Chinese people.” Many other foreign business leaders also expressed their enthusiasm for the Chinese market. Their companies are either increasing investment or expanding production on the mainland to capitalize on the opportunities arising there. Evidently, entrepreneurs do not buy Washington’s ideological warfare. Hong Kong society should reach out to European and US businesspeople and assure them that the Article 23 legislation does not compromise Hong Kong’s business environment.

The center of global economic gravity is shifting. Last year, major developed economies performed poorly, with the US growing only 2.5 percent, Japan 1.9 percent, and the eurozone a mere 0.5 percent. In contrast, emerging markets reported robust economic expansion, with India at 7.7 percent, China at 5.2 percent, and both Vietnam and Indonesia at 5.05 percent. As the US-led West is whipping up hostility toward China, the Hong Kong SAR should actively explore and tap into emerging markets like the Association of Southeast Asian Nations and the Middle East, which will help enhance the city’s status as a key global financial hub.

Second, Hong Kong must actively promote the development of new quality productive forces in step with national efforts. Hong Kong entrepreneurs should respond to the call for developing new quality productive forces so as to strategically position themselves for future industries.

The city boasts distinguished research and development (R&D) capabilities that command a leading position globally. Additionally, as an international financial hub, Hong Kong can provide the financial support necessary for commercialization of R&D results. It will take both government policy incentives and entrepreneurial spirit to develop new products and new industries.

Hong Kong should deepen its integration with mainland industries to develop new quality productive forces, the key to which is to nurture new manufacturing, business models and new services. The world-class production bases in the Yangtze River Delta and the Pearl River Delta offer unparalleled conditions for developing new quality production. With the mainland’s flourishing internet economy and the launch of an AI Plus initiative by the central government, a myriad of novel business models is set to emerge. Hong Kong’s strengths lie in its modern services sector, with distinctive advantages in finance, trade, shipping, international arbitration, and intellectual property transactions. It should focus on providing new services that align with the mainland’s new manufacturing and new business models, so that both sides jointly maximize the potential of new quality productive forces.

Third, more efforts should be devoted to developing a mega events economy.

Hong Kong Chief Executive John Lee Ka-chiu puts great emphasis on developing a mega events economy as a core strategy to revitalize Hong Kong’s economy. The city’s distinctive advantage lies in its unique status: It enjoys strong support from the motherland and global connectivity.

In striving for economic development, Hong Kong must dedicate itself to enhancing both its physical and institutional connectivity to transform itself into an international hub.

Mega events can augment Hong Kong’s international reputation and influence, which is a form of institutional connectivity. On the day following the passing of the Article 23 legislation, Xia Baolong, director of the Hong Kong and Macao Work Office of the Communist Party of China Central Committee, was briefed separately by Lee and Legislative Council President Andrew Leung Kwan-yuen. Xia urged the Hong Kong SAR to go all-out to promote economic development from now on, and conveyed President Xi Jinping’s and the CPC Central Committee’s care for and expectations of the city.

Hong Kong now has a clear focus and course of development on socioeconomic advancement. All quarters of society should harness their collective wisdom and strength to forge a promising future amid a constantly changing global landscape.

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.