Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia rejected claims that the semi-autonomous city’s glory days are numbered instead declaring that an even more vital role lies ahead for the bridge between east and west.
«Amidst China’s rapid development, some may look at the nation’s growing wealth relative to Hong Kong’s, and the falling proportion of Hong Kong’s contribution to China’s GDP, as indicators that the city’s glory days are numbered,» according to Li’s blog on the HKEX website.
Coupled with recent political instability, Hong Kong’s future as a bridge between China and the outside world has been placed in serious doubt. Chinese authorities have already been promoting fellow special administrative region Macau as a potential successor to becoming its international financial hub.
«However, such a conclusion is at odds when you consider Hong Kong’s unique and significant contributions to the development of China’s financial markets, and the strong likelihood that these will be further enhanced in the years ahead,» Li said.
Hong Kong’s China Resume
Whilst Hong Kong’s representation of the overall Chinese economy fell from 27 percent in 1993 to 2.7 percent in 2018, Li cited a myriad of other accomplishments that have played a key role in the mainland’s development, especially in financial realms.
This includes Hong Kong’s effective functions as a channel for foreign investments (representing 60 percent of last decade’s total); a leading IPO market (ranked top seven out of the past 11 years); a cross-border stock link that has led to $1 trillion of foreign A-share ownership; and a cross-border bond link that has led to 3.8 trillion yuan ($550 billion) of turnover since its 2017 launch.
Hong Kong More, Not Less, Vital in the Future
Li admitted that «deep-seated political, social and economic tensions» remained unresolved and that such factors posed a challenge to the city’s «One Country, Two Systems» regime – a key framework whose successful implementation is required so that «Hong Kong’s future success can be ensured».
«Going forward, China’s further rise and the continued dominance of the U.S. could set the two nations on a collision course. Meanwhile, the disruptive power of technology could reshape the world’s economy and global society, spurring a fierce battle between these major powers for technological dominance,» Li added.
«This increasing polarization means that our world needs more and better connections and not fewer. As such, Hong Kong’s role as the connector between East and West will only become more vital.»
