A great article to share with you!
For Hong Kong, given its current woes... It behooves to acknowledge and respond to the question - "...a rethink of what the city needs to do to maintain its relevance in a less globalized and more polarized world" Pursuant, it comes down to sound leadership, vision, and quality of policymaking. The author offers pertinent context and pointed remarks about why Hong Kong should differentiate itself beyond "just another Chinese city" - "Hong Kong's economy has had a lost half-decade, contracting for three of the last five years. Growth may continue to be sluggish as the overall Chinese economy struggles with high levels of debt, excess manufacturing capacity, insufficient demand, deflationary pressures and a persistent decline in asset values." "Despite Hong Kong's connections with China -- the world's fastest-growing economy over the last three decades -- the city's economic growth has lagged that of Singapore by a considerable margin. As recently as 2003, Hong Kong GDP per capita was roughly equal to Singapore's. Today, Singapore is nearly 70% richer by this measure even though China grew much faster than Southeast Asia over the intervening period." "Recognizing that it had fallen behind, the Hong Kong government has introduced policies to support reindustrialization in recent years. While these efforts are laudable, the allocated resources are hardly sufficient after some 40 years of deindustrialization. Not only is Hong Kong too expensive for most parts of the manufacturing value chain, but its government lacks the know-how to undertake productive industrial policy." "Another important facet of Hong Kong's economic integration strategy has been the Hong Kong dollar's peg to its U.S. counterpart. As a result, the Hong Kong Monetary Authority has been propping up the local currency and pushing up interest rates over the last two years to keep up as the U.S. Federal Reserve raised rates to combat inflation. But Hong Kong did not have an inflation problem -- its problem was slow growth due to China's weak post-COVID recovery, which meant it needed lower interest rates and a weaker currency. Hong Kong's economy is far less synchronized with that of the U.S. than it was three decades ago. This suggests that the city should now have a more flexible exchange rate system. For instance, it could link the Hong Kong dollar to an undisclosed basket of currencies and allow it to fluctuate within a wider band, similar to how Singapore manages its exchange rate." #hongkong #china #economy #connector #hkd #trade #finance #manufacturing #growth https://lnkd.in/gfsuXtiJ
