Erosion of Hong Kong’s institutional autonomy will hurt advantage over mainland China cities, high credit rating: Moody’s
- Ratings agency affirms city’s long-term issuer rating of ‘Aa2’
- City’s status as an independent entity could be ‘altered suddenly and much earlier than 2047’ by some of its international partners, the agency says
A potential erosion of Hong Kong’s institutional independence from Beijing over time could diminish the special administrative region’s advantage over mainland Chinese cities, as well as its higher credit rating, ratings agency Moody’s said on Friday.
The agency said it was affirming the city’s long-term issuer rating of “Aa2”, two notches higher than China’s “A1” and two notches lower than the United States’ “Aaa”.
“Over time, and as 2047 – the end of the 50-year transition period – approaches, the risks also relate to a potential actual or perceived erosion of the institutional features that provide Hong Kong with a degree of political and economic independence and, related to this, a comparative advantage vis-à-vis large cities in the mainland,” Moody’s said.
“Such an erosion would likely result in a weakening of Hong Kong’s very high institutional strength and a narrowing of the gap between Hong Kong’s and China’s ratings.”
Hong Kong, a former British colony, was handed back to China in 1997. And under the Sino-British Joint Declaration of 1984 deposited with the United Nations, Hong Kong would “remain unchanged for 50 years” – it would retain a high degree of autonomy with its legal and judicial systems unchanged.
The 50-year transition period ends in 2047.
