China syndrome: Hong Kong's obsession with mainland developments
Poor attendances at Apec presentations point to danger of HK being overshadowed by mainland developments
Every year, I and veteran Apec Business Advisory Council member Anthony Nightingale give a couple of presentations to Hong Kong General Chamber of Commerce members on trends in trade and investment across the region. We would be happy to meet more business groups, but few are willing to give us the time. Even with the chamber, attendance usually sits at a meagre 20 to 25 people, mostly trade officials from consulates.
Our most recent presentation this month was different. The audience bulged to 80 people. Why different? In short, the title: "Apec: into China's year of chairmanship". Mention China, and people turn up in droves. Talk about trade, or even worse include a dull reference to "Apec", and the room empties.
What else is news, you may ask? Of course, Hong Kong businesses are anxious to learn all they can about the mainland. Obviously, for Hong Kong businesses, China's chairmanship of Apec is a big deal. Not only is this year the 25th anniversary of Apec, and the 20th anniversary of the "Bogor declaration" that in 1994 famously and ambitiously set a target for free and open trade and investment in the Asia-Pacific region by 2020 - even more important, Beijing clearly intends to use its year of Apec chairmanship to give substance to the economic reform programme that was tantalisingly sketched out in the "decision" of the Communist Party Central Committee plenum in November.
But there is a story behind Hong Kong's obsession with developments on the mainland that troubles me, and gives me sleepless nights over our future competitiveness.
I have always argued that if Hong Kong was able to survive - and thrive - when China was closed to the world, then surely it should prosper even more as the mainland opens and re-engages with the global economy. But today I am no longer so sure. The "China vortex" has now become so powerful an influence on Hong Kong - and is set to become steadily so much more powerful in the years to come - that the very internationality that has underpinned our value in past decades is being put in jeopardy.
The obsession is quite similar to that of British companies while the European single market was taking shape in the 1970s and 1980s. Executive teams were so anxious to make sure they were properly positioned in Europe that scant attention was given to developments occurring elsewhere in the world. The result? European firms today have a strikingly smaller presence in the Asia-Pacific markets than they ought to. British firms have paid a high price.
It is not just poorly attended presentations on Apec that have alerted me to this potentially damaging neglect of the wider Asia-Pacific economy. As I talk to companies like Standard Chartered on regional issues, I find increasingly that I have to fly to Singapore to talk to the executives focusing on the region. Its Hong Kong team focuses on the local market and on the mainland. Regional stuff is handled by Singapore teams.
I am also still in a state of shock that our government, and businesses which should have known better, failed to recognise as the mainland started to negotiate its huge free-trade agreement with Asean that we needed to be at the table, and in the agreement. By the time our businesses realised we needed to be in the deal, terms were already being sealed and we were politely told (by a very self-satisfied Singapore in particular) that if we wanted a free-trade agreement with Asean, we would have to negotiate our own deal. Don't hold your breath on that one. The result? A Pearl River Delta company exporting goods to Malaysia has tariff preferences that it will lose if the cargo exits through Hong Kong. Our logistics sector is a big loser.
Above all else, our government and our businesses have to remember that we become just another Chinese city the minute we lose our unique value as an international intermediator between China and global markets. I frustratingly find that Beijing officials often recognise this more clearly than our own officials or business leaders. By "losing the plot" on Asean - which at 630 million people is not a market to be sniffed at - we are putting this international intermediation role in jeopardy.
Despite the heady appeal of the "China vortex", our future prosperity rests on looking outward as keenly as we look in. It means making sure we are multilingual, and our job market is open. It means making sure our legal system, and local standards and regulations, converge with international standards. It means strengthening our Trade Development Council and government economic and trade offices' operations in the region - not at the expense of building our presence on the mainland, but in tandem with it. Meanwhile, I wonder how long it will be before the Chinese General Chamber of Commerce invites me for a chat.
David Dodwell is the executive director of the Hong Kong-Apec Trade Policy Group