Opinion | Very Uncertain Future for Hong Kong

by Angelo Giuliano

There is an ego problem behind this self-proclaimed movement for freedom and democracy. Some of them like to look down on mainland Chinese so much brainwashed they have been by thinking they are superior while the success of Hong Kong is of their parents and great grandparents that came from the Mainland seeking for a better future and fleeing the great setbacks of last century’s China, Japanese invasion, great leap forward, cultural revolution.

The success of Hong Kong can be mainly attributed to luck, because of being the entry door to Mainland China, it took advantage of “service” China and play the middleman between western countries seeking cheaper labor from China.

The use of Hong Kong has been as well for banking/financial purposes to serve in/out-bond investments for China.

The value of the middleman position is becoming less and less relevant for Hong Kong as there are other alternatives (direct investment, Singapore shell co, etc.), also most companies now buy directly with the Mainland.

Because of the economic structure of Hong Kong as being based mainly on the “service” industry, it might face serious challenges as the greatest values nowadays are built on creativity and IP/patents creation which Hong Kong is very much lacking.

It is also relying a lot on its tourism industry, mainly from tourists coming from the Mainland.

How does the future look like for Hong Kong?

Because of the last protests and riots and later the coronavirus we have seen a big drop in tourism from 200’000 to 3’000 daily visits.

Before the coronavirus there was an estimate of 6’000 shops to be closed in 2020, now it is looking more like an estimate of 10’000 shops to be closed by the end of 2020. This will come with a ripple effect of job losses, consumer confidence and overall further drop in GDP.

More and more ex-pats are seeking alternatives to Hong Kong and might start moving away, the reputation of Hong Kong is suffering, and a lot of companies are also reconsidering their Asia HQ and shall move out should the instability becoming the new endemic virus.

Now imagine….20 years from now.

Hong Kong China GDP share went from 27% to 2.7%. This is due to the low level from where China started, the high growth and the China population size. But we could imagine Hong Kong falling below 1% of China share of GDP in 20 years from now. Hong Kong then will really become less and less relevant.

Further chaos would literally destroy the Hong Kong tourism and financial industry, we could imagine that the roles would be reversed completely, our rioters having to cross the border to work in Shenzhen restaurants and Hong Kong becoming a place for cheap tourism, Shenzhen middle class would go to Hong Kong to visit Disneyland and Wan chai foot massage, weekend bar activities such as beer and rugby and horse track watching, not much high value there for an International city. Sorry for the sarcasm.

This might look like an extreme scenario, but it could be well a possibility.

We can take the example of Venezuela which was one of the richest countries in the World, The average Caracas citizen used to go to Miami for weekend shopping while now over 2 million have fled Venezuela for other destinations because they were just starving.

Greater Bay area

There is a revolution happening just next door which Hong Kong could be part of, the Greater Bay area could become the next Silicon Valley and Hong Kong could be a great actor in this unique experience. The richer the whole area the more relevant Hong Kong will become a touristic place and for the use of its financial platform for the growing Shenzhen high tech industry.

It is up to Hong Kong to take advantage of this special position, China is extending its hand and it will do all it can to better integrate Hong Kong in the Chinese 21st-century revolution because the real revolution is happening in China and is happening NOW, Hong Kong can still be the bridge between China and the rest of the World and we could all win from that.

Now the problem that no one can solve…. the one country two systems>

This is the impossible question to solve, 1C2S was the solution in 1997 and it has become the problem now. Hong Kong is not taking full advantage of being fully integrated within China and it suffers the rigidity of a democratic system. We have seen what happened in Taiwan in the last 10 years, just immobilism and selfish fights at the expense of the greater good.

As long as our pan-democrats will work against opponents and not for Hong Kong, as long as there will be foreign meddling trough NED, as long as we will have very bias anti-China/antigovernment media coverage (Apple daily, RTHK, etc.), as long as HK teacher will keep on teaching kids to hate china, CHAOS will be the norm

I like to call it DEMOCRAZY

We will all lose I am afraid. In history setbacks can become opportunities, China knows it too well, it paid a very high school fee in deaths, destruction, and humiliation over the last 200 years. Hong Kong has been immune to that, paying the price brings maturity and Hong Kong lacks this maturity I am afraid.

People might wake up one day when there have lost too much and the price to pay was not worth. 得不偿失

Let’s hope Hong Kong will not lose its soul in the process. Namaste.