Hong Kong Remains, and Perpetually Is, an Exceptionally Important Chinese Metropolis
Updated Assessment: Hong Kong's Resilience Amid US-China Rivalry
It seems that the doubts about Hong Kong's future have subsided, thanks to a change in perspective from Stephen Roach, a prominent commentator on China.
Previously, Roach, a former Morgan Stanley Asia chief, implied that Hong Kong was on a downward spiral, declaring it as "just another Chinese city." His statement, delivered sixteen months ago, stirred a wave of concern due to its insinuation of diminishing significance for Hong Kong and its unique role.
In contrast, Roach's more recent view paints a different picture. In a piece for the Financial Times, he stated that Hong Kong is indeed similar to cities like Shenzhen and Guangzhou, boasting technology and advanced manufacturing respectively. However, Hong Kong's appeal lies in its role as China's primary international financial center—a function it has maintained since even under British rule.
Roach's apparent change of heart stems from his re-evaluation of one of his original criteria: Hong Kong as a pawn in the US-China conflict. He previously agreed that the city would suffer due to the prolonged tensions and rivalry between the two superpowers. However, he now admits that Hong Kong has benefited from a more powerful strain of financial decoupling between the US and China [1].
The city's stock market has experienced impressive growth, with the Hang Seng Index surging about 50% since his initial declaration. Additionally, Hong Kong's capital market is poised to reclaim the global top spot in terms of fundraising, driven by major IPOs such as that of Contemporary Amperex Technology, a mainland China-based company [1].
Despite these positive developments, Roach still considers Hong Kong as "still over," meaning the city faces ongoing challenges. He views Hong Kong as increasingly subsumed within China's framework, while retaining its well-established financial infrastructure [2]. This suggests a changed, but still relevant role in the international financial system.
Local officials have countered Roach's prior pessimism by emphasizing Hong Kong's unique assets such as its separate legal and financial systems and its role as a bridge between China and the West. They also point to recent regulatory advancements, like the newly enacted law on stablecoins, which position Hong Kong as a testing ground for digital currencies within China. This underscores Hong Kong's ongoing importance in financial innovation [2].
In essence, Roach's perception has evolved somewhat—he no longer sees Hong Kong as entirely "over" but acknowledges that it has benefited from the US-China rivalry in trade and finance. However, he highlights Hong Kong's evolving identity as more integrated within China's framework, signaling a transformed but still critical role in the global financial landscape [1][2].
[1] Roach, S. (2021). "Hong Kong's surprising recovery after all." Financial Times.
[2] Wyatt, G. (2021). "Hong Kong proves resilience amid US-China tensions." South China Morning Post.
- In a shift from his initial perspective, Stephen Roach, a renowned China expert, now views Hong Kong's role as a primary international financial center as a key factor that sets it apart from cities like Shenzhen and Guangzhou, despite their technological and manufacturing advancements.
- Roach's revised stance on Hong Kong's future is influenced by his recognition that the city has benefited from a stronger financial decoupling between the US and China, a factor he initially believed would lead to decline.
- The resurgence of Hong Kong's economy, as evidenced by the impressive growth of its stock market and the potential for its capital market to reclaim the global top spot in terms of fundraising, showcases the city's adaptability amid the ongoing US-China tensions in trade and finance.
