Why Hong Kong Matters So Much to China



Posted by Ed 21 days ago
HONG KONG⁠—Since China resumed control of Hong Kong in 1997, the city has served as a conduit for trillions of dollars in fundraising, trade and investment.

Having a separate system—sealed off, yet under Beijing’s thumb—caused a raft of social and political concerns that gave rise to this year’s protests, now in their fifth month. But the city also enabled China’s rise.

Today, Hong Kong makes up a much smaller part of China’s overall economy than it did 22 years ago. Its role as a gateway, though, remains undiminished, meaning China faces a substantial financial cost for any crackdown.

George Magnus, an economist and the author of “Red Flags: Why Xi’s China Is in Jeopardy,” said Hong Kong stands out from its mainland rivals for its rule of law, competent regulators, low taxes, free movement of capital and use of English.

Neither Shanghai nor China’s free-trade zones “can really compete with what Hong Kong is and does,” he said.

Hong Kong is still China’s financial window on the world, and the rest of the world’s financial window on China.—George Magnus

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