So, Hong Kong is not going down the drain after all. What a relief! At least that’s the latest reassessment of Stephen Roach, who is something of a big potato among the China commentariat.
Some 16 months ago, the former Morgan Stanley, Asia boss seemed to have finally joined the “death of Hong Kong” brigade, having declared that it is “just another Chinese city” now. His claim – “it pains me to say Hong Kong is over” – caused a bit of a shock because his views were usually considered moderate and measured.
Actually, we are still “just like any other big Chinese city”, he concluded in a recent Financial Times op-ed, like “Shenzhen with its technology, Guangzhou with its advanced manufacturing”. Hong Kong is “special” only for its “role as China’s major international financial centre”.
Well, Hong Kong had long been the main foreign exchange and investment funding source for communist China even under the British. Its functions may have expanded, but its key financial role remains. Not much has changed.
Roach said he used three “Hong Kong is over” metrics: worsening governance and collapsed autonomy; declining economy tied to the rest of the nation; and a victim caught in the US-China rivalry.
It is the last criterion that Roach has changed his mind on, rather than the first two. Actually, he is a Johnny-come-lately. A while back, this newspaper, among others, was already pointing out how the city’s capital market was roaring back, with its initial public offerings poised to regain the global top spot. Meanwhile, the Hang Seng Index has vastly outperformed the S&P 500 in the United States this year.
Roach now admits: “Hong Kong has benefited from the more powerful strain of financial decoupling between the US and China.
