Published: 02:11, June 14, 2024 | Updated: 09:29, June 14, 2024
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Hong Kong’s economy remains robust and resilient
By Oriol Caudevilla

Predicting the economic prospects for the Hong Kong Special Administrative Region has become trendy, if not controversial, these days. Gloomy or promising, the city’s future holds some uncertainties that deserve a sober and balanced review.

Mark Mobius, billionaire investor and founder of emerging-markets asset manager Mobius Capital Partners, published a blog post titled Hong Kong: Far from Over, stressing that “Hong Kong must reinvent itself and make better use of the strengths it has cultivated over the years”. He also made a reference to the potential of the artificial intelligence (AI) industry for Hong Kong, saying that the city “would stand to benefit significantly by embracing technology and AI to align with China’s ambitious plans and to solidify its role as China’s bridge to the world”.

As I have mentioned on many occasions, Hong Kong’s strength and resilience has given it a track record of emerging unscathed from daunting challenges, from SARS in 2003 to the global financial crisis in 2008.

The social unrest in 2019-20 presented the city with unprecedented challenges, both socially and economically. The subsequent COVID-19 pandemic hit Hong Kong hard from an economic perspective. Nevertheless, the city’s attractiveness has not diminished at all; it remains one of the world’s most important financial centers.

Although people around the world often associate Hong Kong with finance, the city in fact also excels in many other areas, such as the arts and leisure industries. Its excellent facilities, infrastructure and low crime rates combine to make it an attractive destination for both tourists and talent.

Hong Kong has advantages when it comes to attracting talent in the current geopolitical landscape, which I believe is a promising role that the city can play in the big picture of the country’s AI development strategy. I have been advocating constructive cooperation between the HKSAR and the Chinese mainland in the promising AI industry. The mainland’s strong AI industry is a blessing for the city. Paul Chan Mo-po, financial secretary of the HKSAR, said he believes that the city can contribute to the country’s AI technology development with its talent pool and its expertise in international financial services.

Aside from Hong Kong’s cluster of world-class universities, it is its financial expertise that makes the city a promising innovation hub. The Global Innovation Index 2023 by the World Intellectual Property Organization ranked Hong Kong fifth in Asia and 17th globally out of 132 economies. The trio of Hong Kong, Shenzhen and Guangzhou has been ranked second in innovation globally for four consecutive years. Integration into the national development strategy is a boon for all.

Recently, a memorandum of understanding was signed between InvestHK and the Bay Area Council of San Francisco to promote cooperation, especially in the green economy, which is an important indicator that the “business-first” principle stands strong both in the city and in the West. It is worth noting that this is not the first memorandum of this kind that the city has signed recently. Last year, Saudi Arabia and Hong Kong signed six bilateral agreements — another front line that the city is eager to claim to offset strong geopolitical headwinds.

Hong Kong’s overall performance secures itself a high place in finance-related rankings. For example, Hong Kong maintained its fourth place in the 35th edition of the Global Financial Centres Index, released by China Development Institute and Z/Yen Group in March. It was one of the two Chinese cities in the top 10, alongside Shanghai, which ranked sixth. Overall, Hong Kong had a satisfactory 2023 and is expected to have a better 2024, which will see the city consolidate its status as an international financial center. GDP growth is forecast to stabilize at an average of 2.3 percent in 2025-28, despite the negative external economic circumstances.

Currently, Hong Kong and the rest of the Guangdong-Hong Kong-Macao Greater Bay Area are indeed increasing their presence in the fintech industry, as the city manages to impress the world as a promising fintech hub. The “Fintech 2025” blueprint aims at pivoting the HKSAR toward a friendlier regulatory regime for digital assets, proving that the city is positioning itself to become a virtual-asset center/crypto hub.

While Hong Kong’s stock market has been lackluster in recent years, it is in a position to reverse this trend, thanks to all the projects I have just mentioned. If anything, Hong Kong is just adapting to new times.

Mobius was wise to say that “from an investment standpoint, it’s never a good idea to write off the potential of any city or country”, and Hong Kong is, as far as I have found, pivoting itself to bridge the Chinese mainland to the world, from the offshore renminbi business to the expansion of the cross-boundary e-CNY pilot program, from the mBridge to environmental, social and governance (ESG).

To sum up, Hong Kong is constantly showing that it has the potential not only to maintain its role as one of the world’s premier financial centers but to enhance it, thanks to its international presence, its expertise in the financial industry and related industries, and also by tapping into new industries like Web3, all this in the midst of Hong Kong’s involvement in the GBA and other relevant projects.

The author is a fintech adviser, a researcher, and a former business analyst for a Hong Kong publicly listed company.

The views do not necessarily reflect those of China Daily.