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

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: Digital Optimisation Executive - Marketing

    £30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

    Recruitment Genius: Financial Reporting Manager

    £70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

    Recruitment Genius: Payments Operations Assistant

    £23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

    Recruitment Genius: Telephone Debt Negotiator

    £13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

    Day In a Page

    On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

    On your feet!

    Spending half the day standing 'reduces risk of heart attacks and cancer'
    Liverpool close in on Milner signing

    Liverpool close in on Milner signing

    Reds baulk at Christian Benteke £32.5m release clause
    With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

    The big NHS question

    Why are there so few new GPs when so many want to study medicine?
    Big knickers are back: Thongs ain't what they used to be

    Thongs ain't what they used to be

    Big knickers are back
    Thurston Moore interview

    Thurston Moore interview

    On living in London, Sonic Youth and musical memoirs
    In full bloom

    In full bloom

    Floral print womenswear
    From leading man to Elephant Man, Bradley Cooper is terrific

    From leading man to Elephant Man

    Bradley Cooper is terrific
    In this the person to restore our trust in the banks?

    In this the person to restore our trust in the banks?

    Dame Colette Bowe - interview
    When do the creative juices dry up?

    When do the creative juices dry up?

    David Lodge thinks he knows
    The 'Cher moment' happening across fashion just now

    Fashion's Cher moment

    Ageing beauty will always be more classy than all that booty
    Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

    Health fears over school cancer jab

    Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
    Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

    'I forgive everyone, but I don't forget'

    Fifa president Sepp Blatter issues defiant warning to opponents
    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

    Weather warning

    Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
    LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

    High hopes for LSD

    Meet the volunteer users helping to see if it cures depression and addiction
    German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

    Saving Private Brandt

    A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral