The Chinese language metropolis of Hong Kong had a tough 2023. Hong Kong’s economic system grew by 3.2% final 12 months, barely slower than economists anticipated, and much under the federal government’s forecast of 4-5% at first of 2023. A hoped-for post-COVID increase in journey and retail has fizzled out. A slower-than-expected Chinese language economic system can be dragging down town’s inventory market, with the Dangle Seng Index now hovering across the stage it was in July 1997, when town returned to Chinese language sovereignty.
“It pains me to confess it, however Hong Kong is now over,” Stephen Roach, the previous chairman for Morgan Stanley Asia, wrote in a Monetary Occasions opinion piece in February.
To make issues more durable for Hong Kong, worsening tensions between the U.S. and China may put the squeeze on town, which has lengthy thrived on having hyperlinks to each the Western and Chinese language economies.
Paul Chan, Hong Kong’s Monetary Secretary, is preaching a a lot totally different narrative: A extra sophisticated worldwide surroundings makes a spot like Hong Kong important.
“The geopolitical problem might be there for fairly a while,” Chan mentioned in a dialog with Fortune editor-in-chief Alyson Shontell on the Fortune Innovation Discussion board in Hong Kong on Wednesday.
“Given the present scenario, the distinctive standing of Hong Kong, below the One Nation, Two Programs construction, turns into much more necessary,” he mentioned, referring to the construction wherein Hong Kong will preserve authorized, regulatory and financial techniques aside from mainland China till 2047. In current months, Chinese language officers have steered the system would possibly persist past that date.
“We’re totally different from the remainder of China, when it comes to our manner of doing issues in enterprise, our normal procedures,” he mentioned. “It is a pure platform so that you can get entry to the mainland market, and as a springboard for Asia on the similar time.”
Nonetheless, Hong Kong is seeking to markets outdoors of China, the U.S. and Europe for brand spanking new alternatives. The Center East specifically is a goal for Chan. “This a part of the world is much less acquainted to [Middle Eastern investors],” he mentioned. “We even thought-about utilizing the Hong Kong Funding Company [the city’s new investment company] to seed a number of the new investments collectively.”
The Hong Kong authorities can be attempting to draw extra individuals to town with a brand new expertise visa, the place these incomes greater than 2.5 million Hong Kong {dollars} ($320,000) a 12 months, or graduates from one of many world’s prime 100 universities, can get a visa to reside and work in Hong Kong. “They don’t want a job,” Chan famous.
Nationwide safety
The town’s monetary secretary additionally responded to considerations that Hong Kong’s new nationwide safety laws might be a menace to its economic system.
Final week, Hong Kong’s authorities speedily handed expanded ‘Article 23’ nationwide safety laws, which criminalized acts like theft of state secrets and techniques, sabotage, and exterior interference. The brand new regulation follows an earlier nationwide safety regulation imposed by Beijing in 2020 after social unrest gripped town in 2019.
The U.S. and U.Ok. governments, amongst others, have criticized the laws as lowering Hong Kong’s freedoms and violating the One Nation, Two Programs construction. (Officers in Hong Kong and Beijing have blasted such accusations as interference in Chinese language inside affairs.)
Chan defended the brand new laws on Wednesday, noting that town was constitutionally obliged to cross a regulation of that nature. “While you scrutinize [the Article 23 legislation], it’s no totally different from main jurisdictions just like the U.Ok.,” he mentioned. “We need to guarantee stability and security…in order that we are able to focus our efforts to develop the economic system.”
Whereas Chan did cite “not particularly reasonable” storylines about Hong Kong, he mentioned it was incumbent on town’s authorities to “attain out” and invite extra engagement.
“If individuals can come, make an funding, and earn money, and for individuals to work on their profession growth and revel in [their] way of life, then we will succeed,” he mentioned.
