Are Hong Kong’s best days behind it, or can it remain a top city?
Jesse Friedlander believes geography, combined with factors such as a fine legal system, has primed the city to play a central role in the global economy – for as long as it wishes
Many people fear Hong Kong’s status is being undermined by pressure from mainland China, competition from Singapore, and from a protracted downturn in the finance industry. Insufficient housing, excess air and noise pollution, strained education and health-care systems and stark political and social divisions all contribute to increased concern about its prospects. Despite the host of challenges, I believe the city’s important and unique role in Asia will ensure that prospects remain bright.
One curious phenomenon in our globalised age is that, despite unprecedented degrees of mobility of people and ideas, physical location retains vital importance. Some cities continue to prosper even while their home countries struggle with stagnating economies.
Over the centuries, unique advantages of geography and topography gave birth to urban centres that attracted entrepreneurial people, political support and financial capital available to be invested in long-lasting institutions and infrastructure. Gateway cities now boast leading positions in industries that depend on international connections, like finance, fashion and technology. New York and London are examples where a key industry, i.e. finance, anchors ancillary functions such as marketing, advertising, strategic consulting and technology. As nexus points for talented professionals, profitable corporations and high-spending visitors, these great cities enjoy global prestige.
Quality of life is another key component in maintaining a centre’s dominance. The favourable natural climates around Los Angeles and San Francisco appealed to wealthy connectors who continue to support the academic, artistic and entertainment infrastructure that supports growth and diversification in those economies.
In many ways, Hong Kong enjoys better circumstances than many prominent Western cities. Its geographic position, on the edge of China and at the centre of Asia, is the result of strategic design. Hong Kong was chosen as the British Crown’s major Asian trading port in 1842 due to its favourable trade winds, relatively accommodating climate and proximity to Asia’s major ports and markets. Hong Kong’s position as the preferred meeting point between East and West was bolstered by British investment in world-class infrastructure, an effective bureaucracy, fair legal system and by an influx of highly industrious migrants from mainland China and other parts of the world.
Hong Kong’s advantage versus Western peers stems from Asia’s manufacturing primacy. Asia’s export machine has generated tremendous wealth and nurtured the world’s fastest-growing consumer markets. Simply put, Asia has the world’s most exciting economic, industrial and consumer growth story. And Hong Kong is an ideal location for those organisations that want convenient access to China and the ability to easily connect with the rest of Asia.
Despite these advantages, Hong Kong cannot afford to rest on its laurels. Issues such as quality of life, including the availability of public gathering spaces, the selection of entertainment and leisure offerings, and air and noise pollution must be rectified. Public dissatisfaction with education, housing, social services and the governing process also threaten Hong Kong’s status. To maintain it, the government needs to take serious steps to improve the ability to respond to social pressures and competition from other cities.
By leveraging its native advantages in language and culture, and its world-class service industry, Hong Kong should seize the opportunity to demonstrate leadership in Asia by hosting more multilateral forums. The government should also seek to build up centres for design, media, technology and policy research tailored to the region.
Additionally, we should try to encourage our more prominent corporate interests to embrace initiatives aimed at guaranteeing Hong Kong’s long-term leading role. After all, they will be the biggest beneficiaries of continued success.
Jesse Friedlander, CFA, is a Hong Kong-based research analyst and investor. His area of interests include macroeconomics, geopolitics, language and culture