• Sat
  • Dec 27, 2014
  • Updated: 1:06am
Mr. Shangkong
PUBLISHED : Monday, 08 July, 2013, 2:02am
UPDATED : Friday, 06 September, 2013, 8:06am

Shanghai's free-trade zone puts Hong Kong's future in the spotlight

Hong Kong needs to assess what strengths can help maintain its financial hub status, as the rival mainland city bids to usurp it with its latest deal

BIO

George Chen is the Financial Editor and Mr. Shangkong Columnist at the South China Morning Post. George has covered China's political and economic changes since 2002. George is the author of two books -- This is Hong Kong I Know (2014) and Foreign Banks in China (2011). George has been named a 2014 Yale World Fellow. More about George: www.mrshangkong.com
 

Will the new Shanghai free-trade zone be a game changer?

This question popped up in my mind when I read the breaking news on Wednesday evening about Beijing’s landmark approval to set up a free-trade zone in Shanghai.

To my surprise, when I looked for related reports the following day, the news about Shanghai’s latest victory in winning policy support from the central government had not made it to the front pages of any major Chinese-language newspapers in Hong Kong.

“Is Hong Kong too self-confident or too self-centred?” I asked my colleagues.

For Shanghai, things moved quickly after Premier Li Keqiang visited the Pudong New Area and trade and port facilities in the city in late March. By the end of June, Li had made his decision, and on July 3, state broadcaster CCTV said the State Council had issued an announcement after a meeting chaired by Li that the free-trade zone in Shanghai would be a snapshot of an “upgraded Chinese economy”.

Shanghai’s ambitions to become the nation’s economic engine, leapfrogging Hong Kong as the dominant financial hub in the region, are already an open secret. Shanghai mayor Yang Xiong said after the announcement that the city’s future hinged on the free-trade zone, which could give it a leg up over rivals.

Rivals? Who? Yang did not name any.

To be more realistic, the new free-trade deal for Shanghai, which the cabinet wants to be run on a trial basis in the first phase and then see if such a special zone model can be expanded or copied to other mainland cities, would not immediately threaten Hong Kong’s leading position as one of the world’s most important financial centre cities and also one of the busiest ports.

But in the long run, the Hong Kong government must ask itself what competitive strengths and advantages are unique to the city; and whether these can be kept for the next decade or two. If not, then how can Hong Kong stay competitive, rather than becoming just another mainland city, lagging behind top-tier cities like Shanghai.

The central government is keen to use the free-trade zone in Shanghai as a testing ground for more financial liberalisation, as it supports the city’s ambition to grow into one of the world’s three most important financial centres – on a par with New York and London – by 2020.

Qianhai, just an hour’s drive from Hong Kong, has already been picked by Beijing to explore the possibilities of full convertibility of the yuan, which the government wants to turn into a global currency. Purely from an economic perspective, the time left for Hong Kong to rethink its future is obviously quite limited.

On Wednesday evening, before the news about Shanghai came out, I was watching television at home. I saw Chief Secretary Carrie Lam Cheng Yuet-ngor talking again about budget issues for the West Kowloon arts project.

Time is money, and we spend way too much time just talking about things like West Kowloon when other cities are already taking action and know with crystal clarity what they want to achieve.

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johnyuan
Rule of law is an out dated concept where it is practiced in an inequitable society such as Hong Kong. It is not out of arrogance but perceptive of reality. Your support citing Hong Kong being chosen as a place for business disputes (adjucating) can’t convince me that rule of law is not partial and equitable to all who live under the ‘rule of law’. You must think and look beyond trade disputes. I wish someone can come up a better concept to replace such unreliable piece of rock to rely on. Incidentally, by profession I am an architect.
...
It was swift to become a law after I wrote to the letter column in SCMP advocating property developer must reveal and be truthful of the surrounding around the project for a potential flat buyer. Nevertheless the monthly management fee is left out as a true and right to know information – no matter how tentative it is. It must reveal at least its method. Now, rule of law in Hong Kong still favors the powerful and privileged. No? Rule of law for justice?
johnyuan
'Time is money, and we spend way too much time just talking about things like West Kowloon when other cities are already taking action and know with crystal clarity what they want to achieve.' :
The West Kowloon – ill gotten land by displacing the harbor with a big bite cutting out of it, has been over a decade weathered and escaped the fate of no more reclamation, is like being the most precious jewel left for its big size and absolute commending view. To the government and property developers their plan for its use have been crystal clear between them from the beginning that not a square inch of it should be wasted not for property development. The museum is just incidental – a speck planted as a digression and prelude to the truth of a property development mega project of the most luxury. Letting time to play out the truth hope less embarrassment of what greed for money is traded by the destruction of the harbor. Time is money indeed. But history will never forget and forgive the officials, developers and the Hong Kong silent majority heartlessly all participated in property collusion by deception and displacing the harbor with a very big bite. Make a public park to make up the lost nature not the least it belongs to every citizen. It is in your hands, Mr. CY Leung.
megafun
speaking as a migrant worker from HK, and now living near Shanghai..........don't forget labour laws and tax are very bad, when applied strictly; also the admistrative laws are obstacles which when bribes are taken out of the "smoothing" process will basically kill any business!! Imagine every business is a resturant that needs a fresh license every year, and you can compare the administrative hazzles. Has anyone cunted the number of national tax and loacl tax that is applicable for any SME??????
SpeakFreely
Most HK people are too complacent still talking about rule of law a very outdated concept. Yes china is lacking rule of law. So what? Vc are putting billions there n virtually zero in HK, the money do the taking mr. Hong Kong !

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