Opinion | Hong Kong protests are a call for a rethink of its foundational laissez-faire economic model and immigration policy

Hong Kong has been a natural crossroads for trade and culture for centuries. It thrived when the government in China pursued an open-door policy and declined when its policies turned inward. Hong Kong’s fortunes rose and fell with its changing relationship with China. To understand Hong Kong’s future, we must look to its past.

Until 1949, movement between China and Hong Kong was unrestricted and there were no significant differences in living standards between the two areas. The fall of Shanghai brought numerous entrepreneurs and industrialists from one of the most advanced economic centres in Asia to Hong Kong. However, Hong Kong’s transformation and dramatic turn of fortune shouldn’t be taken as a given.

The post-war economic miracle was maximised by the influx of human capital and laissez-faire governance that relied on market-driven supply and demand. However, due to increasing isolation from China, Hong Kong’s importance as the gateway to South China receded until China’s opening up.

The impact of China’s opening up on Hong Kong is evident. The city’s per capita gross domestic product grew sharply– from US$1,385 in 1972 to US$27,330 in 1997 and US$48,717 in 2018, higher than Germany, Britain, France, Japan and South Korea. Hong Kong ranks first in the global Index of Economic Freedom and fourth in the United Nations Human Development Index. Hong Kong’s Gini coefficient is 0.539, lying between that of New York and London, typical of a global city.

While Hong Kong’s renowned entrepreneurial business community has embraced the opportunities offered by China’s opening up since the 1980s, the population influx has led to public concern over the consequences for labour markets and for education, housing, health care services and infrastructure, even as Hong Kong’s manufacturing base migrated across the border.