In Part 2 of this article, I explore why Hong Kong will remain important and relevant as the international city of China.
Part 1 of the article can be accessed via the following link:
Make Hong Kong Great Again (Part 1) | by Jason Chan | Jul, 2022 | Medium
Does China Still Need the City?
The first question we must ask is: “What does China need?” For one thing, it needs to continue to deliver economic growth to its people, and to do that it has to improve its productivity and have access to capital. In an increasingly shaky global geopolitical environment, China also needs to be more self-reliant on technology and supply chain, as well as to establish a circle of power and influence where it can.
China is not the USSR, and I don’t think a total decoupling between China and the West is even possible — both sides are already in too deep. At the same time, China has repeatedly reiterated its national policy of opening-up, although the country is effectively closed to physical travels currently. This means that international trade, finance and travel between China and the global West shall continue despite periodic disruptions, as well as international exchange on global issues, academic research, sports and many other aspects. Plus, if you cut off China, who’s gonna talk to Kim?
On the other hand, China is resolute about doing things its own way at its own pace, and will not cower to Western demands on how things ought to be done. This means China will remain a fundamentally different political system and society from the West. We are facing a future with two global power centers, two sets of governance models, two military and (to a lesser extent) technology blocs, and two circles of influence. Unlike the Soviets though, these different circles will be intricately linked and overlapping with each other, with many smaller nations trying to play both sides.
After all the chaos, Hong Kong is now firmly under Chinese rule, and people having funny thoughts about it were either arrested, cast away, or left aside. However, one thing about Hong Kong will not, and should not, change: It is so embedded in the global economic and financial system that it is as much in the Western bloc as it is in the Chinese bloc.
This means that Hong Kong is the only Chinese city without a Great Firewall, where common law is used, English is an official language (besides Chinese), which has a freely convertible currency, easier visa and immigration policies, and a constitutional mandate to embrace capitalism. It is also the only Chinese city where non-Chinese speakers can survive at ease and foreigners can obtain Chinese citizenship easily (I know of a few of these proud new Chinese).
It doesn’t mean that Mainlanders do not have access to foreign media (anything is possible with VPN), do not have access to foreign exchange (the central bank alone has US$3 trillion of it), or cannot study or move abroad easily. But those who use Hong Kong as their homebase will find it easier to access everything foreign. As long as China still needs access to the Western bloc, it will be worthwhile and valuable to keep Hong Kong as a buffer zone.
Does RoW Still Need the City?
The real question to ask is: “Does the rest of the world still need China?” For one thing, China has the world’s largest middle class, largest trade volume, largest auto, semiconductor and energy markets, largest housing market, second largest equity and debt markets, and the list goes on. What’s more, Western economies are already so intricately linked with China that, even with the strongest political will, the goal to be decoupled from China will remain cheap talk in the foreseeable future.
Some time ago, there was a popular viewpoint that as long as China continues to open up, Hong Kong will one day meet its expiry date. You know, once China opens its capital account, liberalize further, and be more facilitating to foreigners. As it transpires, this remains a distant dream because China will always do things its own way at its own pace.
After the National Security Law of Hong Kong was enacted in June 2020, foreign pundits and commentators often leave scornful comments which I would roughly paraphrase as, oh, Hong Kong is just another Chinese city, it is not the city I used to love anymore, it is just as authoritarian / unfree / evil / [insert negative adjective] as the Mainland, blah blah blah. But any Mainland-trotter who has spent time under China’s Covid lockdown would tell you, whether Shanghai, Beijing or Fujian, Hong Kong is not the same. Less stringent Covid control is possible in Hong Kong because it operates under a different system, has a different social contract and people generally do things differently.
From the perspective of the West or even the Rest of the World, Hong Kong is an international Chinese city with access to China but which operates under a familiar system. Hong Kong is located at the heart of the Greater Bay Area of China and within 3 hours of flight to most major Chinese cities. Its financial system encourages free movements of money, while having infrastructure in place for direct trading of China’s domestic stocks and bonds. You can even open a Mainland bank account without having to travel to the Mainland. Court rulings in the Mainland and Hong Kong are now mutually recognized, which helps do Chinese business deals under Hong Kong’s common law system. Moreover, if your native language is not Chinese — and even if it is Chinese — Hong Kong is a much more user-friendly city to live, work and play in.
While there are talks of Hong Kong losing talents and business opportunities to Singapore, which are real, Singapore cannot replace Hong Kong’s role as the access point to China, which goes back to the original question — does the rest of the world still need China? If the answer is yes, then Hong Kong’s unique role in the world shall endure.
The Best and Worst City to Live in
Hong Kong is a city that people love to hate. Its housing market is the most unaffordable in the world for the eleventh (twelfth?) year in a row, which means that homeownership is hard even for a young, decent income, double-earning couple. It is crowded almost everywhere, including and especially on the weekends, drivers are rude and reckless, and people are always in a hurry. If you think New York City and London are crowded, hurried and rude, Hong Kong is their turbocharged version.
Recently, an online survey reported that 80% of the respondents said they were planning to move to a foreign country within two years. A decision as big as emigration is often driven by not one, but a multitude of reasons: you don’t like Hong Kong’s political scene, you want a Western education for your kids, your neighbor is also leaving, plus the living space and air are so much better in Vancouver. Deep down, no matter their political inclination, everyone in Hong Kong yearns for an American Dream-style suburban life, living in a large, air-conditioned, gardened house, with a monster-sized fridge sufficient to hold a month’s supply of orange juice, frozen carrots, steaks and ice-cream. Okay, no typical Hongkonger would appreciate the idea of frozen carrots, but you know what I mean.
But if livability is the issue, people would have moved out of Hong Kong long time ago. Afterall, Hong Kong’s housing problem is not new. The older generation would have told you how normal it was for four families to live in the same apartment back in their days. My father used to sleep on a balcony, shared with another person.
Choosing a city to live in is a complex decision — if you are lucky enough to have that choice. I want to land a decent job in a high-paying profession such as finance, consulting, healthcare or scientific research. I want to live within a 30-minute radius from places I would usually go to. I want a safe, convenient, affordable public transport system. I want low income tax. I want both free public healthcare and option for world-class private care. I want to be able to breath fresh air on a mountain, or go to a beach, like right now. Living within a five-hour flight radius to Beijing, Tokyo, Sapporo, Seoul, Singapore and Bali would be nice. Plus, no mass shootings or Asian hate please.
I cannot think of any place in the world that can satisfy all the above except Hong Kong.
Of course, you’ll have to put up with living in a smaller apartment, unless you are an UHNW (Ultra High Net Worth) individual. In another word, what kind of quality of life do you prefer more? It is not an easy choice, but I am willing to trade off some living space for all the other conveniences. Another obvious roadblock is Covid. Unless Hong Kong’s border is fully open, all its travel-related conveniences, such as proximity to the airport, its five-hour flight radius, etc… do not really matter.
But Covid should be transitory, right? Even if it weren’t, people of the world, including stubborn Chinese, will eventually learn to live with it and resume our high octane, mobile, socializing lives. Which means that Hong Kong will eventually be back to its former self as a vibrant, connected, convenient and somewhat-livable city.
If people leave Hong Kong for emotional reasons, such as hatred for China, no one should stop them. However, sentiments may trump fundamentals some of the time, but not all of the time. Ultimately, a city’s attractiveness is based on pragmatic and rational factors. As people come and go, I have no doubt that Hong Kong will be great again.
