Did Hong Kong fumble the ball on China’s ‘golden era’? Yes, says Credit Suisse

Hong Kong has missed the boat on a more than decade-long opportunity to benefit from China’s development, as the mainland’s growth super-cycle is now set to cool amid credit deleveraging and as consumption replaces investment as the centrepiece of the economy, according to Credit Suisse.

Tao Dong, senior adviser and economist with Credit Suisse Private Banking Asia Pacific, told a press briefing on Wednesday that the city gained only peripheral benefits from China’s once-in-a-generation transformation.

“I personally feel Hong Kong has missed this golden window period... in the past decade, there was this huge surge in the Chinese economy, and the Hong Kong economy failed to benefit, with the exception of the tourism sector,” Tao said on Wednesday during a briefing on the outlook for the Chinese economy in Hong Kong.

“By missing this window, Hong Kong missed an opportunity for economic transformation, which holds the key for solving some social problems,” he said.

Hong Kong’s economy, worth an annualised US$177.4 billion in 1997, had tripled in size from US$50.6 billion in 1987. However, in the next 10 years the economy grew by just 20 per cent to an annualised US$211.6 billion in 2007.

The real economy contracted by 2.8 per cent in 2009 as a result of the global financial turmoil. Following a strong rebound in 2010 from a low base, the economy has since been growing at around 3 per cent annually.