APD | Nestor Restivo, Gustavo Ng:Hong Kong's economy has regained its vitality after the implementation of the Hong Kong National Security Law



By Nestor Restivo, Gustavo Ng

(The authors are both the founders of the Argentine magazine DangDai.)

On July 1, 1997, China resumed the exercise of sovereignty over Hong Kong. One of the political challenges of Hong Kong SAR government is to gain the support of the people, that is, to transform itself into a government that the Hong Kong people assume as the authentic representative of their interests.

Considering that politics and economy have a dialectical relationship with each other, it is unavoidable to take into account the economic problems that have affected the Hong Kong people: the injustice in the distribution of wealth. The economy left by the British in Hong Kong, far from being highly competitive, was dominated by a relative handful of tycoons who had historically been privileged by the colonial power. The people of Hong Kong, especially the young, did not see in their future the promise of a better life in this scenario.

Under the principle of "one country, two systems", Hong Kong's economy has maintained a high degree of prosperity since its return to Chinese sovereignty, which gives Hong Kong people the hope for a better life.

In 2019, the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area proposed by Chinese central government has given new impetus to Hong Kong's economic development.

The Greater Bay Area (GBA) is one of the regions with the highest degree of openness and the strongest economic vitality in China, and can play an important strategic role in China's overall development.

A study by the Chinese University of Hong Kong (CUHK) argues that “Outline Development Plan for the GBA can be seen as a continuing effort to transform the Pearl River Delta into an economic zone driven by high-tech industrial systems with production factors. ”

Reaping the benefits of China's reform and opening up over the past 40 years, the Greater Bay Area has attracted talent, capital and other essential resources from around the world, helping the area build a comprehensive industrial chain and experimental zone, dedicated and inclusive environment.

Hong Kong, Macao and the nine cities in the Pearl River Delta region have significant economic strength, incomparable geographical advantages and solid foundations for cooperation, giving a strong impetus to the development of the Pearl River Delta.

Hong Kong, with an advantage in financial services and international links, can contribute to the transformation and upgrading of industries in the GBA, and forge itself as an engine of economic growth.

In the 14th Five-Year Plan (2021-25), China has given the Hong Kong SAR a new role, a new position and new advantages. The development of the Guangdong-Hong Kong-Macao GBA is a platform for the development of Hong Kong to unfold in its full potential.

Hong Kong brings international talent and professional service providers, as well as economic and judicial systems that mainland China lacks, making it an ideal gateway for multinational companies entering the China market.

It is to be expected that Hong Kong will continue to maintain its ties with the outside while taking advantage of the connection with the interior to enhance the GBA's strength.

It is worth mentioning that since the implementation of the Hong Kong National Security Law, the business environment in Hong Kong seems to gain solidity and stability, and the confidence of external investors seems to grow. This is indicated by the report issued last year by Hong Kong SAR government.

According to the report, the amount of initial public offering (IPO) funds raised in Hong Kong in 2020 exceeded $64.2 billion, an increase of more than 50% from the previous 12 months. At the end of June 2021, total deposits in the banking system had risen by almost 8% from the previous June. Hong Kong's GDP expanded 7.9% in the first three months of 2021, the biggest jump in quarterly growth in 11 years.

Another indicator offered by the government is that none of the more than 4,000 transnational corporations operating in Hong Kong have left the city since the implementation of the National Security Law in Hong Kong.

With the double blow of the Anti-Extradition Law Amendment Bill Movement and the COVID-19 pandemic, Hong Kong's economic and livelihood development has been severely hampered .

As Hong Kong's economic success over the past 25 years has been tied to the support of Mainland China, its economic recovery under this context will be inseparable from Chinese economic recovery. It is unthinkable that it can improve the current state on its own.

And as Professor Yang Yuchuan from Hong Kong Financial Services Institute said, once the pandemic is controlled and exchanges between Hong Kong and the Chinese mainland resume, Hong Kong's economy is expected to achieve an even better development.

The new Chief Executive of Hong Kong Lee Ka Chiu will take office on July 1. It is highly anticipated by Hong Kong people that under his leadership, Hong Kong will emerge from the current gloom into a better future.

The IMF also has great confidence in Hong Kong’s economy. It said Hong Kong's financial system will be resilient to future financial shocks and crises, even after a challenging two-year period when the city's economy experienced its worst contraction on record.

In Argentina, the Hong Kong issue has been closely followed for many reasons. The most key reason is that Argentina hopes to learn from it to resolve its territorial dispute with Britain over Malvinas Islands and others occupied by Great Britain in the South Atlantic. Hong Kong, a former British colony recovered by China in the Deng Xiaoping Era, has always been a benchmark for Argentina in terms of recovering Malvinas Islands.

Regarding Argentina's relations with Hong Kong, without a doubt its strategic importance as one of the most important gateways to East Asia has always been taken into account by Argentina.

In Argentina, those who follow foreign trade are aware that Hong Kong is one of the most important logistics centers in Asia, with the first freight airport and one of the largest container ports in the world.

Moreover, Hong Kong itself is an important market with high purchasing power. It could bring benefit to Argentina's agriculture, since there is no agricultural production in Hong Kong. Hong Kong is one of the great destinations for Argentine exports, en route to China or to other places both in China and in Southeast Asia.

Outside of the commercial aspect, it is worth mentioning the promotion of tango, or other music and artistic groups of great international relevance in Hong Kong such as “Fuerza Bruta” musical group. Also, other cultural goods such as soccer, movies or books, and meat and other food products, are popular in Hong Kong.