Hong Kong is not "finished"
Hong Kong’s Central district in 2019
By Henrik Bork
Is Hong Kong “finished”?
Many commentators are currently saying so. I share their concern for the future of this very special place, but I beg to differ.
No, Hong Kong is not finished.
I will list the arguments supporting my personal opinion below, but first let us look at the current picture. It is indeed gloomy. For months now, news reports about political unrest, a lack of leadership and increasing violence from both the police and demonstrators have shown a city in turmoil.
As Fred Rocafort, to quote one of many commentators, has recently laid out in the China Law Blog here…
https://www.chinalawblog.com/2019/11/hong-kongs-demise.html
…Hong Kong is currently in recession, flights are being canceled and many hotel rooms are empty. Foreign businesses are concerned and some foreigners have started to leave.
Right now, it is hard to see how Hong Kong could possibly bounce back in the future, and easy to assume that this once vibrant port city and international finance center might be permanently damaged.
The Greater Bay Area - An Economical Powerhouse in the Making
Well, I have lived and worked in China for three decades now, two of them as a foreign correspondent frequently visiting Hong Kong, the last decade as a businessman, and I have come to be careful with predictions about China and Hong Kong. This applies to both very optimistic and very pessimistic predictions.
Just recently, shortly before the demonstrations in Hong Kong started, I had the chance to visit both Hong Kong and the surrounding “Greater Bay Area” and talk to analysts, startup entrepreneurs, bankers and many other local people about the future of the Pearl River Delta around Hong Kong.
The focus of my research was not politics, but rather the future of the region as a center for innovation and an emerging economical powerhouse - and that is what I want to write about here.
What I heard and saw on site only a few weeks ago confirmed my belief that the Pearl River Delta, to which Hong Kong belongs, may in the future be one of the most affluent regions on earth.
I think that the current political tragedy in Hong Kong may delay the formidable growth that is already visible there, but will most likely not derail it in the long run.
Yes, in the short and medium term what is happening in Hong Kong now may put a dent into the city's and the regions economical development.
But if you think a decade or more ahead, for example until the year 2047, when Hong Kong's current status under the “One country, two systems” formula will come to an end, the picture looks completely different, and there is good reason to believe that Hong Kong will not only bounce back, but might be part of one of the most prosperous regional economies worldwide.
Look at what is currently happening in the “Greater Bay Area”. This vibrant region is home to 70 million people, and includes the two “special administrative regions” Hong Kong and Macao, plus nine cities on the Chinese mainland, namely Shenzhen, Zhuhai, Guangzhou, Dongguan, Jiangmen, Foshan, Zhongshan, Huizhou and Zhaoqing.
Let's set politics aside for a moment, even though this might not be easy looking at the distressing news coming from Hong Kong at this point of time. Let's look at the development plans the Chinese government has announced for the region.
Beijing is determined to not only turn the Greater Bay Area into an economical powerhouse, but into the “world´s Number One”, surpassing other mega-city clusters like “Tokyo, New York and the San Francisco Bay Area” by 2030.
Yes, that's right. The Greater Bay Area, to which Hong Kong belongs, aims to become a formidable rival to Silicon Valley, both in terms of its regional GDP and in terms of innovation and the acceleration of future growth.
Foundations for Future Growth
And the Chinese government is not only talking. It has begun to lay the foundation for the next stage of this development with investments into infrastructure and supporting policies.
The 55 kilometer long Hong Kong-Zhuhai-Macao bridge is open for traffic. It is the longest sea crossing in the world. Currently, traffic is light. But once Hong Kong's integration into the region will progress, the foundation has been laid for the city to be an integral part of this new mega-city cluster.
The Greater Bay Area or “GBA” already has one of the fastest-growing economies in the world as we speak. In 2018, its GDP stood at around $1.7 trillion, surpassing that of many nation states around the world. Serious analysts I talked to in Hong Kong are predicting this to more than double to $3.3 trillion by 2030.
With more speed railway links and highways being built not only from Hong Kong and Macao to the mainland, but also within the region and linking the region to the rest of China, such predictions sound plausible.
Again - it is difficult to predict to which extent current or future political instability in Hong Kong might hamper or slow down this growth. But it is fair to assume that the growth will continue.
There is a lot to criticize about the Chinese communist government, but to arrive at a balanced judgement and fair predictions about Hong Kong's future prospects, the following statement should also be considered: “The Chinese are extraordinary administrators”, one longterm observer of Hong Kong and the surrounding region told me during my recent visit.
So far the government. Then, consider the people living in the Greater Bay Area. Not only the people of Hong Kong, who have shown admirable resilience and diligence during times of historical setbacks. Also consider the other inhabitants of the GBA, in Shenzhen and all these other cities close by, with whom Hong Kong's future is now inextricably linked.
Bright and very motivated young graduates from universities from all over China have moved to Shenzhen, for example, the city directly bordering Hong Kong and another important part of the GBA. They are hard at work building fast-growing companies.
David Li, the founder of the Shenzhen Open Innovation Lab, told me the same he has been telling visitors from around the world who are flocking to Shenzhen to have a look at the innovation ecosystem currently evolving there.
“Startup entrepreneurs here in Shenzhen do things, they don´t talk,”, David Li told me. From robotics to IT, from biotech to digital healthcare, from drones to autonomous vehicles, Shenzhen and the GBA are at the forefront of innovation in China.
Hong Kong’s Future is Brighter than Many Believe
Is it fair to assume that young people in Hong Kong, who live so close to this new innovation hub and emerging economical powerhouse, will in the future also benefit from such developments? I believe so.
All interviews and opinions I have been quoting here have been conducted shortly before the political situation in Hong Kong started to deteriorate this year, that is right. But if you take the longterm view, as China’s administrators regularly do, the recent political events do not render them obsolete.
I am indebted to Roland Berger’s excellent CEO magazine “Think:Act” to send me there for some of the research quoted in this article. My magazine feature about the Greater Bay Area has just been published in Think:Act’s latest edition titled “Digital Darwinism”. It can be downloaded here:
https://www.rolandberger.com/en/Publications/How-evolution-drives-success-in-the-digital-era.html
Again, I share the concern of all commentators who are fearing a negative impact on Hong Kong's future by the current political developments there. My heart goes out to the people of Hong Kong, whom I have admired for decades. Nothing of what I have written here is meant to belittle the current political difficulties and the challenges ahead.
And of course political factors are important. In fact, in my daily work advising the CEOs of multinational corporations and their teams in China on their strategic and crisis communications, a thorough analysis of Hong Kong´s current and future political risks and opportunities has in recent months been in great demand.
Yet, for any business planning a longterm strategy for Hong Kong and southern China, looking beyond the current headlines at underlying economical trends is equally important. That is what I wanted to outline here.
I do believe that Hong Kong is not “finished”. To the contrary. I believe that Hong Kong's future is brighter than most people might currently assume.
To come to a balanced prediction about this city’s future, it helps to not only look at current events in the city proper, but also at regional and macro-economical developments shaping its trajectory in the years and decades ahead.
The integration of Hong Kong into one of the most vibrant mega-city clusters in China and the world is well underway. I think it will continue.
Thank you. If you would like to leave a comment, you are welcome to do so here below.
