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German Think Tank: Hong Kong Is Losing its Status as a Financial Center

A German think tank scholar is concerned that the ongoing demonstrations have caused irreparable harm to the status of Hong Kong as a financial center and that the situation, if allowed to further deteriorate, may also hurt China.

Max Zenglein, head of research in economics at the Mercator Institute for China Studies (Merics), said, after a visit to Hong Kong, that people in Hong Kong believe that the city is gradually losing its freedom. They are therefore pessimistic about the future. Hong Kong’s economy is facing an unprecedented crisis; the number of visitors from abroad has gone back to the level during severe acute respiratory syndrome (SARS) epidemic in 2003.

Zenglein observed that many foreign businessmen are worried that Hong Kong’s high degree of autonomy will be gone forever and are preparing for the worst. As the situation worsens, when Hong Kong loses its advantages of judicial independence and freedom of speech, and is no different from a Chinese city, foreign companies will move their Asian headquarters to Singapore or Tokyo.

Zenglein’s analysis is that the continuous demonstrations over two months have caused irreparable harm to Hong Kong. “Hong Kong’s best time as a global financial center has already passed.” Moreover, the demonstrators did not cause the harm. The Chinese government’s tough reaction caused it. The massive assembly of armed police on the border will only bring greater fear.

Zenglein believes that China’s state-owned enterprises and rich people are highly reliant on Hong Kong’s capital market. China’s “Belt and Road” project also needs Hong Kong. China’s richest people have begun to transfer their assets to Singapore or London, and no longer view Hong Kong as a safe haven.

Source: Central News Agency, August 27, 2019