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  • Oct 1, 2014
  • Updated: 8:11am
Occupy Central
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Occupy Central 'may hurt Beijing's confidence in Hong Kong as financial centre'

Beijing may lose confidence in Hong Kong's role if protests spiral out of control, warns Joseph Yam, former head of the Monetary Authority

PUBLISHED : Monday, 21 July, 2014, 6:21am
UPDATED : Monday, 21 July, 2014, 8:40am

Beijing's confidence in Hong Kong as a financial centre could be shattered if the Occupy Central protests spiral out of control, the former head of the Monetary Authority warned yesterday.

Joseph Yam Chi-kwong, who led the de facto central bank from 1993 to 2009, stopped short of saying state leaders would give up on the city should Occupy go ahead with its plan to block streets if the government fails to offer "genuine" democracy.

But he said it was "natural" for Beijing to work on a "Plan B", such as bolstering its drive to make Shanghai a financial hub.

"If [the protests] take only several days, then it will still be fine. But if the protests linger and reach a point [at which] the operations of the financial sector are affected, the risks will be much higher," said Yam, who is also an adviser to the People's Bank of China.

"I hope the [protests will] not affect people's confidence in the efficiency and sustainability of our financial sector.

"If the state leaders' confidence in Hong Kong is shaken, they might consider setting up another [financial] centre in other cities, like Shanghai.

"It is rather natural and reasonable for the central government to consider a Plan B. If you were [Premier] Li Keqiang , you would do the same," Yam said.

The anti-Occupy Central group, Alliance for Peace and Democracy, said yesterday it had collected about 380,000 signatures in the past two days against the civil disobedience campaign.

Concerns over Hong Kong's falling competitive edge have grown in recent years, with many Beijing loyalists heaping some of the blame on protests and a deadlock on electoral reform.

Last year Beijing moved a meeting of Asia-Pacific finance ministers from Hong Kong to the capital, widely seen as an attempt to avoid protests.

State leaders want to establish Shanghai as an international financial centre by 2020.

Yam was speaking at the Book Fair to promote his new book, Gui On Si Ngai, whose title literally means "the way to be safe is never to be secure".

Yam also said the Hong Kong dollar's peg to its US counterpart should not be considered untouchable as conditions now were very different to 1983, when it was created.

"China is now Hong Kong's biggest trade partner. Whether we should peg with the yuan is not something that cannot be studied," said Yam.

After the session, he said he believed the government had studied the possibility of dropping the peg.

Among the audience for Yam's session was his close friend, defeated chief executive hopeful Henry Tang Ying-yen.

The former chief secretary, now a member of the standing committee of the Chinese People's Political Consultative Conference, urged pan-democrats to compromise on electoral reform.

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This article is now closed to comments

asiaseen
If London and New York can survive occupy movements/demonstrations unscathed, claiming that Occupy Central will destroy Hong Kong sends a very strong message to the rest of the world that the city is not a good place to do business.
ejmciii
The masters have been working to replace HK with Shanghai as the financial hub for a decade. So now that HK actually moves toward being a true international city and HK people take their rightful among the peoples who choose their government, rather than having their government chosen by Mao's and Deng's butt-boys, it is a bad thing? Probably true. China wants slaves, not thinking people. China needs slaves to keep the lid on. How else to Princelings get new Audis and send their little princes to harvard and Oxford while the masses toil in the dust. I guess he wants a slot in the National People's Council too and throwing HK peopl under the bus seems to be the proper path to suck up to the masters.
Paradox314
Agree with ejmciii
It's a distortion to suggest that Beijing MAY look towards Shanghai IF OC gets 'out of control'
What a false threat!!!!
They have not only been looking at Shanghai for a long time they have restructured and groomed it already to be an alternative to HK - All that's missing is rule of law. Beijing's answer to this deficiency is to erode rule of law in HK rather to develop it in Shanghai.
It's disingenuous of Yam to hold this over HK as a threat when it is already de facto.
Ant Lee
the problem is for Beijing to have confidence in HK means HK has to be as corrupted as china (and do things to communist way) - so the rest of the world has to first loose confidence in HK.
rpasea
Oh come on. Where will our comrades launder their ill gotten gains w/o HK on their doorstep?
syn
As long as HK has the rights and rule of law that Shanghai does not, by default, the confidence of foreign investors in the city (i.e. the ones who actually matter for business) will not lose confidence. it's only when those are gone that a focus shift can happen, not because Shanghai has improved, just that HK has eroded down to the point where it makes no difference. Incredible.
sipsip1238
It will take a lot more than China "giving up" on Hong Kong to kill off the city against somewhere like Shanghai. For one thing, Shanghai trade and exchanges are still not transparent enough, which if China tries to drive up transparency, a lot of businesses will most likely fail any international benchmark.
Secondly, the sophistication of the markets in mainland are still junior at best, and it is not something that money can just fix overnight.
Lastly, the city and country is run by a selected few, for any foreign firms looking to enter, it's like playing at the casino where the odds are always not in your favour, and even if you win, they can always hire someone to beat you up afterwards.
lucifer
If Occupy Central has its protest, it is possible, that due to lightning strikes from the recent spate of storms, which clearly indicate the opposition of nature to the movement, could strike a fire work at the moment its going off, creating a chain reaction of atom splitting, causing both Hong Kong and Guangdong to be completely destroyed in a nuclear nightmare. We need to seriously consider this possibility.
nmp_inc
OCLP is hardly the source of HK's faltering role as a financial center and the territory's strategic draft for the last 17 years. Rather, the policy of "patriots ruling Hong Kong" has been because it has been them AND Beijing who have been in charge, not the pan-democrats. Own up. Obviously, the patriot principle has not worked out as anticipated. Time for a change. Beijing should 'dump the patriots' who have aggregated and expanded Hong Kong's social problems: they are a sinking ship. It's time for a new type of patriot: a democratic one.
kctony
Yam said financial hub. Does that mean an international finance center for Shanghai which is in essence a pipe dream. It won't happen. Beijing is not stupid, sir.
The international community will not buy it. An international finance center in a one party rule?
The low transparency of business & government transactions.
The rule of law that favors the privileged & the connected.
Then there is the RMB which is vulnerable to the currency raiders.
You are talking moving a large number of Ivy leaguers to a very polluted city.
Mr. Yam, Beijing is much much smarter than you think.

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