To see how Hong Kong should reposition itself in the face of global uncertainty brought about by the United States, it is necessary to understand the “Make America Great Again” slogan raised by US President Donald Trump.
Trump’s repeated claim to “take over” Greenland reflects an anxiety about securing rare earth resources and Greenland’s potential for a transpolar sea route. Thanks to climate change, this is set to halve the shipping time between Europe and East Asia, which currently goes through the Suez Canal.
Trump’s desire to absorb Canada fits his vision for a continent-sized resource-rich US North America “fortress”, dwarfing Russia’s vast territory by over 4 million square kilometers. Likewise, he aims to control the Panama Canal, with its stranglehold over the economies of South America.
Trump has three arrows in his quiver to address America’s perennial fiscal or budget deficit and its current account trade deficit, and to bring manufacturing jobs back to the US.
The first arrow of tariffs on global trade in goods has been shot, ignoring America’s massive trade surpluses in financial and other services, including high-tech patents. His second arrow is imposing prohibitive levies and fees targeting China-made ships calling at any American ports. The idea is to starve China’s shipping industries of financial oxygen and to reshore America’s long-lost shipbuilding capacity.
The third arrow is set to come in the name of a “Mar-a-Largo Accord”, harking back to the Plaza Accord of 1985, which forced sustained appreciation of the Japanese yen, resulting in Japan’s “Lost Decade” from 1991-2005.
Apart from dollar devaluation, the accord is said to replace US Treasurys with 100-year Treasury bonds. These pay no interest and are only returned with an increased value on maturity after 50 or 100 years. The result would dramatically lower the recurrent interest burden, which now exceeds America’s entire defense budget, would enormously improve America’s fiscal position, and is calculated to usher in a new American “golden age”.
More than two-thirds of US Treasurys are held by American domestic holders, including many institutional entities, including the Federal Reserve, state and local governments, pension funds, insurance companies, and international banks. Many are likely to want these new 100-year bonds as a nondiscountable officially backed collateral to borrow cheaply from the US government. Moreover, discontinuance of issuing interest-bearing Treasurys will make this asset class a rare commodity, pushing up its value for existing holders while lowering interest rates.
However, Trump’s wrecking ball of MAGA bullying tactics is likely to backfire spectacularly.
Many US allies have woken up to the reality of a capricious, transactional, self-serving, and less-trustful US. They are seeking ways to better safeguard their national interests, pivoting toward other promising markets and comparatively more consistent trading partners, including China, ideological and geopolitical differences notwithstanding. Hence a recent beeline to Beijing of visiting country leaders, including many from Western countries.
This points to a momentum for deepening trade relationships at a bilateral or regional level bypassing the US. Examples include the existing Regional Comprehensive Economic Partnership, possible negotiations for China’s admission into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, and a revived EU-China trade and investment deal.
China’s exports to the US have declined from 19.2 percent of total exports in 2018 to 14.7 percent in 2024. China has since been doubling down on expanding trade and diplomatic relationships with other countries, especially those in Europe and the Global South.
These developments are likely to gain more traction as the US weaponizes its economic and dollar hegemony, throwing commonly accepted rules and its value-based global leadership to the wind. When push comes to shove, the US may prove to be less indispensable than Trump’s hubris would have people think.
Let’s turn to how Hong Kong may reposition itself in face of the above changing dynamics. I suggest the following ten points:
First, the Hong Kong Special Administrative Region government should pivot toward the Arabian Peninsula, capitalizing on Chief Executive John Lee Ka-chiu’s recent fruitful visit to Qatar and Kuwait. The entire Arabian Peninsula is focused on visionary plans for the 2030s to 2040s, which involves diversifying to high-tech infrastructure, e-commerce, and global investments, as the Age of Oil, like the Stone Age, draws to an end (although not for lack of oil). This requires rejiggering Hong Kong’s labor pool and business strategies, including attracting more tech-savvy talent and people with Arab-oriented skills, as well as creating a more Arab-friendly business environment.
Second, the HKSAR should likewise pivot toward South America, capitalizing on the recent Beijing Summit on Latin America and Caribbean countries, including Brazil, Chile, Colombia and Peru. Peru’s new Chancay Port is part of the Belt and Road Initiative and a possible hedge against Trump’s intentions on the Panama Canal. To pivot, Hong Kong may first need to open its first economic and trade office in South America.
Third, Hong Kong should gear its human resources and infrastructural development, including cutting-edge research, as a world driver of the Fourth and Fifth Industrial Revolutions, to focus on digital transformation, manufacturing automation, and human-machine interface.
Fourth, Hong Kong should rebrand itself as a World City and a “world class” city. It should exceed expectations in areas including commerce, sports, events, arts, culture, and people-to-people exchanges. This calls for setting up world-class think tanks as well as international platforms and outreach projects, including joint explorations, filming and entertainment productions, as well as humanitarian and ecological missions.
Fifth, the HKSAR should more actively assist Chinese mainland-listed enterprises and US delisted Chinese companies to seek listing or dual-listing on Hong Kong’s stock exchange, so as to further boost Hong Kong’s position as a world financial center for Chinese companies and offshore renminbi-denominated financial products and services.
Sixth, Hong Kong should capitalize on being the world’s 10th-largest wealth management hub, with over 12,500 ultrahigh-net-worth individuals, with a personal net worth of at least $30 million. Our simple and low tax structure, open and free financial environment, extremely convenient and efficient travel location, and relatively high quality of life should be globally promoted with tailor-made supporting services to lure more such individuals to settle in Hong Kong, boosting Hong Kong’s wealth management ranking.
Seventh, Hong Kong should craft the infrastructure and connectivity of the Lok Ma Chau Loop to turn it into a world center for electric vehicles’ (EVs) innovation research and development, linking it with the world’s leading EV conglomerates and advanced digital and semiconductor research facilities.
Eighth, Hong Kong should position itself as a world center for space research and exploration missions, capitalizing on the selection of an outstanding tech-savvy policewoman as the HKSAR’s first astronaut for China’s space program.
Ninth, Hong Kong should actively reduce its civil service bureaucracy, including revamping pay and tenure structures, and taking bold and immediate streamlining actions in tune with the digital age and Hong Kong’s forward-looking priorities.
Tenth, Article 5 of Hong Kong’s Basic Law specifies 2047 as the last year for applying Hong Kong’s capitalist system and way of life. Despite Beijing leaders’ regular reassurances, I agree with suggestions in certain quarters that Beijing should take early legal and constitutional measures to dispel any lingering doubts in the minds of Hong Kong people and international investors.
The author is an international independent China strategist, and was previously the director-general of social welfare and Hong Kong’s official chief representative for the United Kingdom, Eastern Europe, Russia, Norway, and Switzerland.
The views do not necessarily reflect those of China Daily.
