The Chinese language metropolis of Hong Kong had a tough 2023. Hong Kong’s economic system grew by 3.2% final 12 months, barely slower than economists anticipated, and far under the federal government’s forecast of 4-5% in the beginning of 2023. A hoped-for post-COVID growth in journey and retail has fizzled out. A slower-than-expected Chinese language economic system can be dragging down the town’s inventory market, with the Hold Seng Index now hovering across the stage it was in July 1997, when the town returned to Chinese language sovereignty. 

“It pains me to admit it, but Hong Kong is now over,” Stephen Roach, the previous chairman for Morgan Stanley Asia, wrote in a Financial Times opinion piece in February. 

To make issues more durable for Hong Kong, worsening tensions between the U.S. and China may put the squeeze on the town, which has lengthy thrived on having hyperlinks to each the Western and Chinese language economies. 

Paul Chan, Hong Kong’s Financial Secretary, is preaching a a lot totally different narrative: A more sophisticated worldwide setting makes a spot like Hong Kong important. 

“The geopolitical challenge will be there for quite some time,” Chan stated in a dialog with The Sunday Evaluate editor-in-chief Alyson Shontell on the The Sunday Evaluate Innovation Discussion board in Hong Kong on Wednesday.

“Given the current situation, the unique status of Hong Kong, under the One Country, Two Systems structure, becomes even more important,” he stated, referring to the construction by which Hong Kong will preserve authorized, regulatory and financial programs aside from mainland China till 2047. In current months, Chinese language officers have advised the system might persist past that date. 

“We are different from the rest of China, in terms of our way of doing things in business, our standard procedures,” he stated. “This is a natural platform for you to get access to the mainland market, and as a springboard for Asia at the same time.”

Nonetheless, Hong Kong is seeking to markets outdoors of China, the U.S. and Europe for brand spanking new alternatives. The Center East specifically is a goal for Chan. “This part of the world is less familiar to [Middle Eastern investors],” he stated. “We even considered using the Hong Kong Investment Corporation [the city’s new investment company] to seed some of the new investments together.”

The Hong Kong authorities can be making an attempt to attract more people to the town with a brand new expertise visa, the place these incomes more than 2.5 million Hong Kong {dollars} ($320,000) a 12 months, or graduates from one of many world’s prime 100 universities, can get a visa to reside and work in Hong Kong. “They do not need a job,” Chan famous. 

Nationwide safety

The town’s monetary secretary additionally responded to issues that Hong Kong’s new nationwide safety laws may very well be a risk to its economic system. 

Final week, Hong Kong’s authorities speedily passed expanded ‘Article 23’ nationwide safety laws, which criminalized acts like theft of state secrets and techniques, sabotage, and exterior interference. The brand new legislation follows an earlier nationwide safety legislation imposed by Beijing in 2020 after social unrest gripped the town in 2019. 

The U.S. and U.Ok. governments, amongst others, have criticized the laws as lowering Hong Kong’s freedoms and violating the One Nation, Two Programs construction. (Officers in Hong Kong and Beijing have blasted such accusations as interference in Chinese language inner affairs.)

Chan defended the brand new laws on Wednesday, noting that the town was constitutionally obliged to cross a legislation of that nature. “When you scrutinize [the Article 23 legislation], it’s no different from leading jurisdictions like the U.K.,” he stated. “We want to ensure stability and safety…so that we can concentrate our efforts to develop the economy.”

Whereas Chan did cite “not very fair” storylines about Hong Kong, he stated it was incumbent on the town’s authorities to “reach out” and invite more engagement.

“If people can come, make an investment, and make money, and for people to work on their career development and enjoy [their] lifestyle, then we will be able to succeed,” he stated.