Detractors inside and outside Hong Kong suggest that the current protests
will undermine the city as China’s global financial centre. Their arguments run the gamut: political turmoil will hinder the operations of financial firms; China’s possible intervention
will make it unfavourable for financial firms to function; China will deliberately dethrone Hong Kong and promote Shenzhen
as its global financial centre.
The seriousness of the protests cannot be dismissed. For many participants and observers, turmoil in Hong Kong appears overwhelming. Some politicians in Europe and the United States go so far as to argue for sanctions
or other punishments – although they would oppose any attempt by China to intervene in their countries.
Remember, most of the world’s leading financial centres, from New York to London to Paris, have seen their share of turmoil. These unsettled conditions occasionally appear precisely because these centres house pivotal actors in the global economy and inevitably encompass extremes in inequality
: from highly paid workers in finance, business services and corporate management, to the far larger workforce in lower-level service activities.
When such disparities are challenged, protesters frequently target financial centres as symbols of the power they oppose. Hong Kong has faced such protests with regularity since the 1950s.
Make no mistake, Hong Kong is a global business centre, not a nation. So, protests that target retail sales or tourism do undermine
its total economic output as measured by gross domestic product, for example. But that harm does not extend to Hong Kong’s global financial firms and financiers, to its business services firms, or to its regional corporate management.
Hong Kong’s status as China’s “window to global capital” and the third greatest
global financial centre is secure.
Four reasons support this point. First, whatever the challenges, China will never allow the internal security of Hong Kong to break down. The Hong Kong government is charged with that task under the Basic Law, the city’s constitution that sets out the “ one country, two systems
” governance. And China will fully support
Second, Hong Kong houses the pivotal financial firms and financiers which manage the exchange of capital in Asia-Pacific, and between that region and the rest of the global economy. That management originated in the late 19th century and has survived wars, revolutions and economic depressions.
Its resilience derives from an intense network of personal and professional relationships that facilitate the sharing of knowledge and expertise. For these major firms and financiers, location
within the Hong Kong hub is essential to their success.
Third, no viable alternative to Hong Kong exists in the Asia-Pacific. Tokyo remains a global financial centre for Japanese firms and for foreign firms that target the country’s market. Foreign financial firms, including those from Asian countries, have rarely used Tokyo as a wider regional platform.
Sydney is a base only for financial firms serving Australia, and firms in that city are far removed from the key expert knowledge networks covering Asia. Even domestic Australian firms position their Asia-Pacific operations in Hong Kong and their southeast Asia operations in Singapore.
Some observers consider Singapore
a viable alternative to Hong Kong, but Singapore’s financial networks are focused on Southeast Asia, not Asia-Pacific as a whole. And its networks only weakly reach into mainland China.
Fourth, China’s government and its leaders have never deviated in their support
of Hong Kong as their global financial centre. Officials – from the president to the heads of major ministries and financial regulatory agencies – remain quite clear that Shanghai
is a domestic international financial centre, and that Hong Kong is its global centre.
Indeed, the idea that China is building up Shenzhen as an alternative to Hong Kong misinterprets government policy. That policy
promotes Shenzhen as a domestic financial laboratory to test ways to open financial markets in China, as a leading financial centre of the Pearl River Delta region, and as a high-technology hub.
When China’s officials express negative opinions about Hong Kong, they generally are expressing their view that the city’s leaders must do a better job
in fulfilling the terms of the Basic Law, chiefly promoting the welfare of Hong Kong’s citizens. Such negative opinions have never been directed at the city’s financial firms and financiers.
Furthermore, warnings loom for any foreign financial firms that might be contemplating a shift away from Hong Kong. China’s government appropriately would view any foreign firm’s relocation to another Asian city as unsupportive of China’s continued economic growth and development, and shut out their business. Consequently, they will miss out on the vast financial opportunities of what is poised
to be the world’s largest economy.
Concerns about the future of Hong Kong as China’s global financial centre are misplaced. Its financial firms and financiers are the jewels
of China’s access to global financial markets. China’s leaders will never undermine that. Despite the protests, some of which are violent, Hong Kong will remain a global financial centre – and grow even more significant as China’s economy becomes the largest in the world.
David R. Meyer is a senior lecturer in management at the Olin Business School at Washington University in St. Louis, Missouri, US. He has published widely on Hong Kong as a global financial centre. The opinions expressed in this article are solely the author’s
This article appeared in the South China Morning Post print edition as: Misplaced concerns