Hong Kong's tiny hiccup

Paul Slade foresees continued prosperity after the handover

"It will be business as usual for Hong Kong, punctuated admittedly by some unique events," said Chris Patten. Hong Kong's last Governor could be accused of a degree of understatement regarding these "unique events", as Vincent Cheng, executive director of the Hongkong and Shanghai Banking Corporation, acknowledges.

"Handing back a territory to a motherland with a different social, political and economic evolution is a scenario unique in constitutional history," says Mr Cheng. "It may have been inevitable that the process would have been perceived as difficult. However, the number of sceptical views I read about the future of the territory - particularly those from outside Hong Kong - astounds me."

Certainly there have been enough gloomy forecasts for the period leading up to Mr Patten's handover to the Chinese on 1 July. Some predict a brain drain from the territory, robbing Hong Kong of the very skills and intelligence which have made it one of the world's most buoyant economies and a vital financial services centre for Asia and the world. But Mr Cheng argues: "We have more people and capital coming into Hong Kong than ever before. We have rising prosperity and declining levels of crime. The problem is how to handle the influx of people, rather than how to deal with an empty city."

Hong Kong's success story is an impressive one. GDP growth over the past decade has averaged 6 per cent a year, three times that of the OECD countries. Per capita income is US$26,000 (pounds 16,250), higher than that of Britain, Australia or Canada. So far, the leading Hang Seng stock market index and the Hong Kong property market have continued to rise in 1997. Ironically, the very strength of Hong Kong property may also prove a weakness for the territory, as high rental values hit its competitiveness as an administrative and financial centre.

One of the most powerful pointers to continued prosperity for Hong Kong under Chinese rule is the extent to which the two economies are already intertwined. Hong Kong has long since exported its traditional role as a low-cost manufacturing economy to China. Hong Kong-based employers - who already employ five million workers in China - can reduce their wages bill still further by relocating factories to the Republic of China.

The territory has reinvented itself as Asia's leading financial services centre - among other things a debt market for financial futures and derivatives for Chinese stocks. Perhaps most tellingly of all, about 30 per cent of Hong Kong currency already circulates freely in southern China.

Hong Kong also operates as an important gateway for the transfer of capital between China and the rest of the world. More than half the entire flow of capital into China over the past 15 years has passed through Hong Kong. And it's a two-way street: more than half of all foreign investment into Hong Kong comes from China. The need for vast infrastructure projects throughout Asia will require capital investment worth US$1.5 trillion by 2001, much of which will be routed via Hong Kong. Asia is also well- placed to provide a refuge for Western investors who fear their own stock markets may soon be in for a downturn. Asian countries now trade extensively among themselves, with less industrialised countries in the region providing the manufacturing base for their more developed neighbours. This makes the region increasingly independent of economic upsets in the West. Sir Alan Donald, a former British ambassador to Beijing, says: "What used to be the state of affairs - the West caught a cold and the rest of the world sneezed - is no longer true.

"The centre of gravity in trade and economic terms is tending to move from the Atlantic to the Pacific. In a couple of years' time, the USA will be doing more trade with Asia than it is doing in Europe"n

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

    Isis hostage crisis

    The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
    Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

    The runaway buccaneers and the ship full of gold

    Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

    Maverick artist Grayson Perry backs our campaign
    Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

    Assisted Dying Bill: 'I want control of my life'

    This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
    Move over, kale - cabbage is the new rising star

    Cabbage is king again

    Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
    11 best winter skin treats

    Give your moisturiser a helping hand: 11 best winter skin treats

    Get an extra boost of nourishment from one of these hard-working products
    Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

    Paul Scholes column

    The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
    Frank Warren column: No cigar, but pots of money: here come the Cubans

    Frank Warren's Ringside

    No cigar, but pots of money: here come the Cubans
    Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

    Isis stands strong as its numerous enemies fail to find a common plan to defeat it

    The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

    Virtual reality: Seeing is believing

    Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
    Homeless Veterans appeal: MP says Coalition ‘not doing enough’

    Homeless Veterans appeal

    MP says Coalition ‘not doing enough’ to help
    Larry David, Steve Coogan and other comedians share stories of depression in new documentary

    Comedians share stories of depression

    The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
    Has The Archers lost the plot with it's spicy storylines?

    Has The Archers lost the plot?

    A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
    English Heritage adds 14 post-war office buildings to its protected lists

    14 office buildings added to protected lists

    Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

    Scientists unearthed the cranial fragments from Manot Cave in West Galilee