Night view of Hong Kong [File photo]
How wrong were those Western pessimists who thought Hong Kong's reversion to China in 1997 spelt doom!
In fact, Hong Kong is well on its way to becoming a truly "world city," and UK reports that Prudential, one of the world's biggest insurance companies, may move its global headquarters there from London. This is one of the latest signs of Hong Kong's growing power and international prestige.
Credit the smart policy the Chinese government has followed since regaining control of the former British colony – refuting foreign "experts" who doubted China would be able to retain international business confidence in the territory by "leaving well alone" in regards to the structure inherited from the British.
The possible Prudential move emerged as a result of new regulations coming into force in Europe and the United States by 2014, and will require companies to hold additional capital reserves running into the billions of dollars/pounds to offset any potential risks around the world (a result of the banking collapse triggered by such events as the ongoing "euro-crisis"). As Prudential now generates close to half of its revenue from Asian operations, the region in general and Hong Kong in particular, seems a logical choice for any headquarter relocation.
This is a good time to say that the political leadership in both Hong Kong and Beijing deserve great credit for their wise stewardship over the past 15 years. One only has to look at the results of repeated studies by reputable international business survey organizations to see how well Hong Kong (population 6.5mn) has parleyed its colonial legacy and Chinese cultural heritage into a bridge to the colossus immediately to its north (population 1.3bn). Multinational companies looking at Hong Kong like what they see.
The physical and political proximity to China's mainland, allied with a modern infrastructure, internationally accepted and transparent legal system based on English law, a lower tariff structure, and a free flow of information is turning Hong Kong into one of the world's leading financial and business centers. This is especially important when Western businessmen hesitate about making the final commitment to the PRC on top of their heavy investments in manufacturing, marketing and product development because of lingering concerns over the mainland administrative structure and legal and accounting transparency.
At the same time, Hong Kong's economic profile is changing. Until 2004, it was the world's leading container port, but after that fell to its current position of third some distance behind Singapore and Shanghai. Its role as a key entrepot port is now declining partly through changes in China's trade structure that make shipping goods through Hong Kong less attractive.
However, that's not such a bad thing as the territory moves up the economic chain away from physical goods into finance and high-tech business services.
Addressing the United Nations Economic Commission for Latin America & the Caribbean in Santiago, Chile, on April 12, Chief Executive Donald Tsang took the opportunity to stress the key role Hong Kong was playing in China's overall development, through its role as the preeminent gateway to the mainland, by declaring:
"As one of the most free, open and globally connected economies in the world, we in Hong Kong readily support initiatives that expand opportunities for economic as well as cultural cooperation….we continue to play an active role promoting open trade and investment through our membership of the World Trade Organization and APEC - membership that we enjoy in our own right under the 'One country, two systems' formula that recognizes Hong Kong as a separate Customs territory and separate economy with our own monetary, trade, investment and fiscal policies."
In my opinion, one of the most interesting aspects of the speech was data showing Hong Kong investing US$460bn into the mainland economy by the end of 2010, while around US$400bn had flowed in the other direction. That represents a great statement of confidence in the future.
During a visit to Hong Kong last August, China's Vice PremierLi Keqiang announced a package of more than 30 measures to further strengthen Hong Kong's competitiveness as the channel between the mainland and the outside world. Banking and financial services in particular will benefit as steps to internationalize the RMB gather pace, where Hong Kong is perfectly placed because it possesses the technological infrastructure to handle large volumes of multi-currency, real-time gross settlement transactions. This, in turn, is part of the overall plan to develop Hong Kong as China's major offshore RMB center – although London and Singapore are also keen on gaining a big role in this regard.
All in all, rather than Hong Kong being stifled by the return to Chinese control, it has been liberated and is well on the way to new success with an outstanding knowledge-based economy.
The author is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/geoffreymurray.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.