Shanghai (China), June 29 (EFE) .- Hong Kong celebrates 25 years of its return to China after the British colonial era and it is doubtful whether it will maintain its status as an international financial center against greater influence Beijing i. local affairs and its economic downturn since the 2019 protests and the covid pandemic.
One of Hong Kong’s biggest attractions for international investors was its status as a gateway to China: since 1997 its sovereignty has returned to Beijing, but under the paradigm known as’ one country, two system ‘, which allowed the and former colony to maintain its capitalist model for 50 years, with independence in areas such as border control or monetary policy.
Natixis chief economist for Asia-Pacific Alicia García Herrero, precisely based in Hong Kong, explained to Efe that the years before the recession were marked by “uncertainty about the future” and “not easy.”
Despite the high rates of emigration from Hong Kongers to countries such as the United Kingdom or Canada in the 1990s due to fears of a return to China – especially after the 1989 Tiananmen massacre, the two decades after the end of the colony were ” fully committed and successful, “in the opinion of the expert.
In those years, the Spanish economist recalls, “an important ‘offshore’ financial center” was developed and other sectors such as real estate – the square meter in Hong Kong is one of the most expensive in the world- or a luxury that is experienced on his part. boom, partial pressure due to Chinese immigration and the attraction of talent to the financial industry.
ECONOMIC WEIGHT BY YEAR
However, Hong Kong’s gross domestic product (GDP) began to show signs of slowing as early as 2018, the year in which the then US President, Donald Trump, declared a trade war against China, and its effects were felt in the former -colony also. .Welsh.
However, the decline in accounts began after the pro-democracy protest movement that shook the city in the second half of 2019, with a crash in the second half that resulted in a 1.7% overall decline in the local economy. . .
For example, in that year the number of tourists arriving – mostly from mainland China – fell by 14.2% year on year, clearly due to the protests, which often led to conflicts between riot police and the sectors. most of the protesters are aggressive.
And, while the conflict finally narrowed with the onset of the covid pandemic – in Hong Kong the trauma of the SARS outbreak, a similar disease, in 2002 and 2003 – which still lasted – it led to an even bigger drop in GDP in 2020. : 6.5%.
In 2021, as in many global economies, there was a “statistical rebound effect”, in the words of García Herrero, with a significant recovery (+ 6.3%) thanks to the comparatively reduced base of the previous year but , the economy suffered again, falling 4% year-on-year in the first quarter of this year.
CHINA OVER HONG KONG, HONG KONG LOOKS AT CHINA
García Herrero believes that these ” external shocks ” should not be taken into account when analyzing Hong Kong’s economic prospects, but points out that there is considerable “uncertainty” about the “rule of law” in light of Beijing’s growing influence in Beijing. city management, especially after the imposition of the controversial National Security Law in 2020 in response to the protests.
So Hong Kong is once again facing a “pretty massive emigration” scenario and even changes to the headquarters of some foreign companies, which was also partly due to local authority occupation of ‘zero covid’.
Continuing in the footsteps of mainland China, Hong Kong remains one of the few territories in the world that remains committed to a zero-tolerance policy against coronavirus, leading to isolation and relative international uncertainty, such as for foreign managers . who were at risk of being separated from their children if they became infected.
The IMF has recently warned that outbreaks – and consequent restrictions – could slow down human flows and thus weaken the recovery of private consumption in Hong Kong, although the strength of its fiscal and foreign exchange reserves would help to mitigate the Union ‘s negative impact. financial stability.
Another “cushion” is, according to García Herrero, the Hong Kong Stock Exchange, one of the most important in the world, and a haven for more and more Chinese companies that, under pressure from Beijing and Washington, leave U.S. stock markets or rule. out publicly in them, leaving the Hong Kong market as the “one clear place” to finance money in “strong” currencies such as dollars.
Precisely because of this, the Spanish economist sees a growth opportunity for Hong Kong as an ‘offshore’ place for China, though not “as a global financial center”, but with the ability to “maintain and create wealth” still.
“It’s a model change, but not a disaster, far from it,” he says. EFE
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