The integration of Hong Kong with the Pearl River delta in Guangdong is the most striking aspect of these trade and investment links. Citation: Schenk, Catherine. Secondary school provision was expanded in the 1970s, and from 1978 the government offered compulsory free education for all children up to the age of 15. Language links are at the top of the page across from the title. Hong Kong retains executive, judiciary, and legislative autonomy in all matters . Following the implementation of the National Security Law, however, there have been concerns about the impact on the territorys global financial status. For example, the government is involved in public works projects, healthcare, education, and social welfare spending. From the mid-1950s Hong Kongs rapid success as a textile and garment exporter generated trade friction that resulted in voluntary export restraints in a series of treaties with the U.K. beginning in 1959. Hong Kong is a full Member of the World Trade Organization. At the end of April 2022, 74 such companies had listed in Hong Kong taking advantage of this change, raising more than $580 billion. After overthrow of the dynastic system in 1911, the Kuomintang (KMT) took a decade to pull together a republican nation-state. as he and China's President Xi Jinping (L) attend the fourth plenary session of the National People's Congress at the Great Hall of the People in Beijing on March 13, 2018. While manufacturing was moved out of the colony during the 1980s and 1990s, there was a surge in the service sector. The Hong Kong Crackdown Is A Financial Disaster For China: Is - Forbes Factories employing fewer than one hundred workers accounted for 42 percent of Hong Kongs domestic exports to the U.K. in 1968, amounting to HK$1.2 billion. Hong Kong is also a preferred location for corporate treasury centres. The international poverty line is a monetary threshold under which an individual is considered to be living in poverty. Hong Kong's role as an offshore money centre for China may decline if Beijing further tightens its grip on the city; China has long wanted Shanghai to become the country's premier finance hub . As the amount of affordable housing diminishes, it has become much harder for families to find homes in their home country. As another fund manager put it, Hong Kong as we know it is dead The hedge fund community will move on, Hedge Funds in Hong Kong vs Other Asian Centers, Hedge funds are the jackrabbits of the financial world, light on their feet and ready to move quickly. For this reason it is regarded as among the most favorable places to start a company. Singapore overtakes Hong Kong as Asia's top financial centre; 3rd in These are both huge decades-long projects, running in parallel. [34] The Kwai Chung container complex was[when?] Opportunities also flow from mutual market access between the mainland and Hong Kong. And almost everything in finance rests on long-accumulated habits of trust, confidence in the fairness of the system, the security of contracts, and the predictable behavior of ones counterparties. At the time of their issuance, the 30-year U.S. dollar-denominated bonds and the 20-year euro-denominated bonds were the longest in tenure ever issued by an Asian government. China's economy will continue to expand and develop under the Belt and Road Initiative and the new development strategy of "dual circulation," which emphasizes the domestic and external markets reinforcing each other. Xis Hong Kong move is a financial disaster for China. In the same decades, British government spending as a percent of GDP rose from 17% to 20%. The mainland Chinese stock markets are more conservative and restrictive than that of. The Economic Freedom of the World Index listed Hong Kong as the number one territory, with a score of 8.59, in 2020. In the Global Financial Centers Index 21 (GFCI) Hong Kong ranks forth behind London, New York and Singapore. Close to 1,400 U.S. firms have operations there . Hong Kong | History, China, Location, Map, & Facts | Britannica Ten years ago most American leaders were inclined to support Chinas emergence as a new major player even an incipient superpower, a rival in some ways, but an unthreatening one. In 1940, there was only one contender for the financial capital of Asia: Shanghai. Why Hong Kong Needs Autonomy to Remain a Global Financial Hub China and Western countries both still need Hong Kong, and Hong Kong has shown its ability to adapt to maintain a strong position. Nearly two-thirds of those assets came from non-local investors. In our research, weve found that Hong Kongs economic success since the 1997 handover can be attributed to the one country, two systems principle. China markets help cement Hong Kong as global financial hub - CNBC Going forward, by maintaining a closer relationship with Beijing, Hong Kong is set to strengthen its position with these stock exchange connections. Even in the face of the adverse impact of the fifth wave of COVID-19, we expect full-year GDP growth of between 1 and 2 percent in 2022. What To Know About Hong Kong's Special Status And What Happens If - NPR Hong Kong has built its financial status on (among other things) a free press. And why does the future look promising for Hong Kong? Inflation below 5% is in green.[50]. Low taxes, lax employment laws, absence of government debt, and free trade are all pillars of the Hong Kong experience of economic development. The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$3.732 trillion. ", "The World's Freest Economy Is Also Its Least-Affordable Housing Market", "2014 Index of Economic Freedom Hong Kong", "Report for Selected Countries and Subjects", "The 202223 Budget Government Revenue and Expenditure", "Provisional financial results for the year ended March 31, 2022", What does Hong Kong export to Macao? our latest doing business publications, and access to our Asia archives. The renminbi (RMB) has retained its position as the fifth most active currency for international payments by value, with a share of 2.15% as of August 2021, according to Swift data. These charts show why Hong Kong is important to China - CNBC The New York Times has decided to shift its Asian operations to Korea. It is its main interface with global capital markets, the conduit for most foreign direct investment in China.Around, Investors like funneling cash into China through Hong Kong because the citys legal and regulatory systemcombined with the substantial Hong Kong footprint of wealthy Chinese and Chinese companiesmeans investors have real recourse in the event of disputes. In 2021, the Housing Price Index was double of what it was in 1997, while the Real Wage Indexwas almost unchanged. Hong Kong also underwent a rapid and successful process of industrialization from the 1950s that captured the imagination of economists and historians in the 1980s and 1990s. Xi began to experiment with a more active approach to the geopolitical game, seeming to ignore the nuances of the more fragile economic game. Hong Kong SAR - Overview, Origin, Composition, Economic Status While we cannot underestimate some individuals fears that they may be arbitrarily detained under the new national security law, there is also evidence that the law will curb the social unrest that has been detrimental to business in Hong Kong. Hong Kong will continue to develop as a global finance hub and should not just be viewed as China's offshore financial centre even as it continues to ramp up efforts to support the . Schenk, Hong Kong as an International Financial Centre: Emergence and Development, 1945-65, London: Routledge, 2001; and Y-P Ho, Trade, Industrial Restructuring and Development in Hong Kong, London: Macmillan, 1992. The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$3.732 trillion as of mid-2017. Hong Kong manages over 70% of the international trade volume in Chinese currency which makes it the cornerstone for any plan to elevate the yuan to true hard-currency/reserve-currency status, competitive with the Dollar or the Euro. Some have been more successful than others but the strategies of development have been similar. [44] They point out that there are still many ways in which the government is involved in the economy, some of which exceed the degree of involvement in other capitalist countries. There have been many economic initiatives in China over the years to create new financial centres. Even where Chinese companies are only listed in Shanghai or Shenzhen, Hong Kong has the added advantage of stock exchange connection schemes with both cities. Also, the GDP per capita rose by 87 times within the same time frame. Subscribing grants you this, plus free access to our articles and magazines. These have ranged from the clumsy handling of the Huawei affair to the disproportionate counter-attacks aimed at Australia (including evidently an all-out cyber-war) after the Aussies presumed to request an audit of the Covid-19 matter. Over the past decade, residential Hong Kong property prices have increased close to 242%, with growth finally starting to decelerate in 2019. Employment in the service sector rose from 52% to 80% of the labor force from 1981 to 2000 while manufacturing employment fell from 39% to 10% in the same period. Our vision is clear: Boosting Hong Kong's status as an international asset- and wealth-management center. The economic development of Hong Kong is unusual in a variety of respects. In the early 1980s there was another negative shock related to politics, as the terms of Hong Kongs return to PRC control in 1997 were formalized. Many of these firms are now planning to decamp to Tokyo or Singapore. The financial sector has been one of the biggest beneficiaries of this institutional legacy and the free flow of capital in and out of Hong Kong has made the territory attractive to investors. The ETF Connect is another milestone in the integration of the capital markets of the mainland and Hong Kong. [20] There is no officially recognised central banking system, although the Hong Kong Monetary Authority functions as a financial regulatory authority. Hong Kong SAR, China: Hong Kong is the premier financial and business center in China and a regional financial leader. In 1997, the territory accounted for 18% of China's overall economy; that figure is 2% today. This transformation of the structure of Hong Kongs economy from manufacturing to services was dramatic. Under Article 8 of the Basic Law of Hong Kong, which serves as the citys de facto constitution, Hong Kong has a common law system that it inherited from the UK. The region of Hong Kong has been inhabited since the Old Stone Age, later becoming part of the Chinese Empire with its loose incorporation into the Qin dynasty (221-206 BC). Economy of Hong Kong - Wikipedia Beijing ICP prepared NO.16065310-3, Disinformation report hotline: 010-85061466, Hong Kong's future as a global financial center. [64] Evidence shows that the availability of affordable housing has declined, forcing households to spend more on shelter and less on other necessities. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Economies in Asia, particularly the mainland economy, will continue to be the engine of global economic growth. By restricting the sale of land leases, the Hong Kong government keeps the price of land at what some consider as artificially high prices and this allows the government to support public spending with a low tax rate on income and profit. This makes Hong Kongs legal system much stronger than Chinas civil law system, where vast numbers of laws have been written in recent decades but have not necessarily been tried, tested and applied yet. [65] In 2009, Hong Kong raised 22 percent of IPO capital, becoming the largest centre of IPOs in the world. We argue this is due to its common law system and because Hong Kong has been able to maintain an independent set of company and financial laws from the ones in China. [55] Totaled USD 774M, with precious metal watches, jewelry, trunks and cases as the major trading products, the exports to the Hong Kong forms 53% of Macau's total exports. Shanghai would not have become a financial center without policy support from the central government (Table 4). It was assumed that economics would prevail over traditional ideological differences. As of May this year, 22 such companies have returned to Hong Kong, the total market capitalization of which accounts for over 70 percentof all China Concept Stocks listed in the United States. After being ceded by China to the British under the Treaty of Nanking in 1842, the colony of Hong Kong quickly became a regional center for financial and commercial services based particularly around the Hongkong and Shanghai Bank and merchant companies such as Jardine Matheson. At the time of the removal from the index, the founder of the Heritage Foundation indicated that while the SARs "offer their citizens more economic freedom than is available to the average citizen of China", these economic policies are still "ultimately controlled from Beijing". The longer-term impact of the crisis has been to increase the intensity and importance of Hong Kongs trade and investment links with the PRC. How the political situation unfolds will depend upon several factors and remaining uncertainties, including the approach towards China and Hong Kong from the incoming Joe Biden administration in Washington DC. - Quora Answer (1 of 5): The strength is rooted in its proximity to the mainland and the developed platform for the exchange of capital and goods. While the impact of COVID-19 is likely to be short to medium-term, the regions sociopolitical tensions have raised concerns about the long-term economic credibility of Hong Kong, including its status as a global financial center. A major move a few years back was to allow emerging and innovative enterprises with weighted voting rights structure as well as pre-revenue or pre-profit biotechnology companies to list in Hong Kong and facilitate qualifying issuers to seek secondary listing in Hong Kong.
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