Riots will have huge impact on SAR’s investment landscape By Zhou Bajun Wednesday, December 11, 2019, 00:20 By Zhou Bajun Hong Kong’s economy has slid into a recession since the second quarter of this year. Despite the grim outlook then, Hong Kong enjoyed political stability, and so did the global economic and political landscape. The financial tsunami in 2009, which originated from financial-derivatives trading in the United States, triggered another wave of economic recession for Hong Kong. However, Hong Kong was not in the turbulent zone, as the local financial market had far fewer derivative products on trade than its US and European counterparts.
At that time, the global economic, financial and political landscape was undergoing a major shift that had not occurred in a century, while Washington was still focused on anti-terrorism as its global strategy. The Chinese mainland, which maintained a rapid GDP growth rate of 8 percent amid the global recession, was the mainstay of the world economy and an economic stabilizer for Hong Kong. The trade war waged by the US against China began in March 2018 and lasted through 2019. Moreover, the Trump administration has started to hinder China’s development in the areas of science and technology, finance, military, education, etc. Sino-US relations used to be characterized by collaboration and competition in the past 40 years, but now they have turned to be solely competitive or even antagonistic.
Since Hong Kong has long been under the influence of the West, it has naturally been tapped as an outpost in Washington’s all-out effort to contain China. The passage of the Hong Kong Human Rights and Democracy Act is intended to coerce China to yield to US’ demands by taking Hong Kong hostage. Should it fail to achieve such a purpose, Washington wouldn’t hesitate to destroy Hong Kong, with collateral damage to its own interests in the city.
Investors from places that do not have cordial relations with China will withdraw part or even most of their investments from Hong Kong, while those from places that are friendly with China will expand their businesses in the city
Against this backdrop, the new round of recession that Hong Kong’s economy has now entered into could be worse than in 1998 and 2008, with longer losing streaks for the GDP and a much higher unemployment rate. What’s more, Hong Kong’s investment environment could deteriorate to a terrible level, a situation unseen in the previous two recessions. The central government announced measures on Dec 2 to counteract the act. As Washington and Beijing continue to wrestle over Hong Kong affairs, it is expected that US investors will adjust their investment strategy in the city.
This will cause a ripple effect on investments by other investors, including the locals and those from the Chinese mainland and overseas. How mainland companies will treat Hong Kong is a question that concerns many. This is wishful thinking.
Mainland enterprises will not only stay on in Hong Kong, but will also increase their investments in the city. Blackshirt rioters are categorizing companies in Hong Kong into “yellow enterprises” and “blue enterprises”. Through battering the latter and supporting the former, they are attempting to build a “yellow economic circle”. This wicked attempt is undermining the business environment and investment ecosystem in Hong Kong.
I believe the riots will eventually be quelled, and the “yellow economic circle” plot will be crushed.
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