Opinion | Defying Naysayers: Hong Kong's enduring advantages and new competitive frontiers

By Hordei Arista

In recent years, global media saw a resurgence of pessimistic forecasts about Hong Kong's future. For one, American economist Stephen Roach, in a Financial Times opinion piece titled "It Pains Me to Say Hong Kong is Over," argued that the city's best days might be behind it, pointing to political upheavals and economic challenges as signs of its decline. Such declarations mirror the infamous pronouncement by Fortune magazine in the mid-1990s that foretold "The Death of Hong Kong." Yet, history has repeatedly shown these predictions couldn't be further from the truth. This resilient metropolis thrives, driven by its unique status, robust economy, technological advancements, and vibrant cultural dynamism.

A Beacon of Economic and Financial Vitality

Hong Kong's economy has long been a marvel of resilience and dynamism.  In 2023, Hong Kong's GDP increased by 3.2% in real terms over 2022, leading among advanced economies, reaching 383.5 billion USD. This positive growth trend continued in 2024, with a low employment rate and moderate inflation levels. In May 2024, merchandise exports experienced another month of double-digit growth compared to the previous year. Exports to Mainland China and the United States continued to climb significantly, while European Union exports shifted upward. Exports to several other key Asian markets also increased.

With over 70 of the world's 100 largest banks operating here and the Hong Kong Stock Exchange being one of the world's top by market capitalization, the city's financial infrastructure is unparalleled. By the end of 2023, the total stock market capitalization was over 32.1 trillion HKD by the end of June 2024, and the average daily turnover in June 2024 was 111.2 billion HKD, an increase of 11 percent from 99.8 billion HKD for the same period last year. In the first half of 2024, the average daily volume of futures and options reached 1,532,608 contracts, marking a 12% rise from the 1,368,115 contracts recorded during the same period last year. Similarly, the average daily volume of equity index futures was 595,290 contracts, reflecting a 6% increase compared to the 564,196 contracts in the previous year's first half.

Furthermore, Hong Kong is the third-largest trading center for US dollar foreign exchange, only after London and New York City, and it is also one of the most important international banking centers, with assets totaling 3.5 trillion USD. Hong Kong is also the world's most important insurance market, Asia's largest international asset management center, and a leading personal wealth management hub. It is one of the world's top bond issuance centers and the largest offshore RMB center. These are all testament to Hong Kong's enduring role as a leading international financial center.

Behind Hong Kong's economic and financial success is its world-renowned legal system, underpinned by an independent judiciary and the common law practice. The city's legal framework is highly regarded for its fairness and transparency, providing a stable and predictable business environment. Hong Kong's legal services gather practitioners from the world's top institutions, with over half of the world's top 100 law firms practicing in Hong Kong. This legal robustness is complemented by a low and simple tax regime, which continues to attract multinational corporations. In 2023, there were a total of over 9,000 regional headquarters, regional offices, and local offices in Hong Kong, with parent companies located outside Hong Kong, showcasing Hong Kong as one of the best destinations for businesses.

An International Trade, Shipping, and Transportation Powerhouse

The city's strategic location and free-port status make it an indispensable gateway connecting Mainland China and the rest of the world, ensuring a seamless flow of goods and capital. As a result, Hong Kong is an international trade, shipping, and transportation powerhouse. Hong Kong also boasts a highly efficient transportation network. Subway lines extend in all directions; the high-speed rail links Shenzhen within 14 minutes and Guangzhou in 48 minutes, and through the Hong Kong-Zhuhai-Macao Bridge, one can drive to Macao and Zhuhai in 45 minutes.

The Hong Kong International Airport is a testament to the city's role as a global aviation hub. Consistently ranking among the top for both passenger and cargo traffic, the airport handled over 4.3 million tons of cargo and nearly 40 million passengers in 2023.

The city's maritime industry is equally formidable, with its port supporting extensive shipping routes that connect Asia with the rest of the globe. In 2023, Hong Kong's port handled over 14.4 million TEUs (Twenty-Foot Equivalent Units) of cargo, maintaining its status as one of the world's busiest container ports. This connectivity is bolstered by a sophisticated logistics and telecommunications network, ensuring Hong Kong remains a linchpin in global trade.

Moreover, Hong Kong hosts one of the world's largest shipping registries, with over 2,600 vessels registered under the Hong Kong flag as of 2023, collectively accounting for over 130 million gross tons. The city's substantial fleet underscores its pivotal role in global maritime logistics.

Cultural Melting Pot and Innovation Hub

Hong Kong's cultural landscape is a rich blend of East and West. This fusion is vividly reflected in its world-class museums, theaters, art galleries, culinary scene, and festivals, which has positioned Hong Kong as a cultural ambassador on the global stage. The Hong Kong International Film Festival continues attracting global attention, showcasing the city's cinematic talent. The Hong Kong Jockey Club, Lan Kwai Fung, Disney, and Ocean Park are world-class leisure and entertainment brands. Events like Art Basel Hong Kong attract artists, collectors, and connoisseurs worldwide.

Education and research are also pillars of Hong Kong's strengths, Hong Kong's DSE examination is recognized by more than 300 universities globally, and is the only city in the world that has 5 of the world's top 100 universities. These institutions not only attract international scholars and students but also contribute significantly to global research, particularly in fields like medicine and technology.

Great education attracts top talents and, in turn, drives innovation. The city's investment in R&D is paying dividends, with significant advancements in fintech, biotech, and artificial intelligence. The Hong Kong Science and Technology Parks Corporation has nurtured over 1800 innovation and technology startups, contributing to the city's vibrant tech ecosystem. Major companies like AstraZeneca and Contemporary Amperex Technology have established R&D centers in Hong Kong, highlighting the city's growing appeal as a technology hub.

Steadfast Support from the Central Government

Underpinning Hong Kong's enduring success is the unwavering support from the Central Government of China and a series of favorable policies. Looking ahead, Hong Kong is poised to play a pivotal role in the Greater Bay Area initiative, which aims to create an integrated economic and business hub comprising Hong Kong, Macau, and nine cities in Guangdong province. This initiative promises to unlock significant synergies and opportunities, particularly in technology and innovation. These policies, coupled with the proactive governance of the Hong Kong Special Administrative Region government, are set to consolidate Hong Kong's inherent advantages further while forging new ones. This collaborative effort ensures that Hong Kong will continue to shine as the "Pearl of the Orient."

Overall, the narrative of Hong Kong's demise is not only prejudicial but also fundamentally flawed. The city's unique advantages—its economic vitality, legal robustness, strategic positioning, world-class education and research, and cultural dynamism—are all enduring pillars that will continue to underpin its success. With the steadfast support of the Central Government and proactive measures by the HKSAR government, Hong Kong is well-equipped to reinforce its existing strengths and cultivate new ones, ensuring its place as a global beacon of opportunity. The obituaries are best reserved for the skeptics' outdated narratives, not for this indomitable city.

The views do not necessarily reflect those of DotDotNews.

The author is a pundit.