The sign at Hong Kong International Airport still says, \u201cWelcome to Asia\u2019s World City.\u201d Normally worth nothing more than a sideways glance, this time the sign gave me pause for thought as I disembarked from the plane on a recent visit.<\/p>\n
On the surface, Hong Kong seems to have bounced back in the year and a half since I wrote my\u00a0controversial article<\/a>\u00a0in the\u00a0Financial Times, titled \u201cIt pains me to say Hong Kong is over.\u201d Never mind that the property market hasn\u2019t recovered. The all-important financial sector is booming again; a high-flying Hang Seng Index and a return to the top spot in the global IPO rankings recall the days of yore.<\/p>\n But while Hong Kong\u2019s vastly oversold market has benefited from the strong performance of frothy global equity markets, the true test of the city\u2019s resilience will come with the inevitable correction. Such a pullback may be close at hand, especially if widespread fears of an AI bubble are realised \u2013\u00a0though, as always, market timing is a guessing game.<\/p>\n Of course, the point I was making in my February 2024\u00a0Financial Times\u00a0article was that outward appearances are often deceiving. I argued that the Hong Kong of old had been replaced by a new version that more closely resembled a China-centric administrative region, with Deng Xiaoping\u2019s model of \u201cone country, two systems\u201d morphing into \u201cone country, one system.\u201d<\/p>\n I cited three reasons for believing this: First, Hong Kong\u2019s economy, which is tightly correlated with the Chinese economy, remains weighed down by China\u2019s protracted sluggishness. Second, the Chinese government\u2019s post-2019 crackdown continues to weaken the rule of law, free speech, and press freedom in Hong Kong. Third, Hong Kong is caught in the crossfire of the worsening Sino-American conflict, driving a wedge between the city, whose growth depends heavily on economic openness, and some of its trading partners.<\/p>\n My views do not sit well with many old friends in Hong Kong. When I point to the\u00a0shrinking expat talent pool<\/a>\u00a0\u2013 a key attribute of a world city \u2013 they counter that this trend is offset by an influx of Chinese workers from the mainland.<\/p>\n They are not wholly wrong. Walking the streets or frequenting the shops nowadays, one is just as likely to hear Mandarin as Cantonese, Hong Kong\u2019s dominant dialect. But that doesn\u2019t change the fact that many of the city\u2019s traditional foreign workers, especially Brits and Americans, are increasingly voting with their feet.<\/p>\n The same can be said for China\u2019s\u00a0stifling influence<\/a>\u00a0on Hong Kong\u2019s governance. Three\u00a0major newspapers<\/a>\u00a0\u2013 Apple Daily, Stand News, and Citizen News \u2013 have closed since 2019, and\u00a0other outlets<\/a>\u00a0such as Citizens\u2019 Radio, FactWire, InMedia, Hong Kong Free Press, and Mad Dog Daily have either ceased operations or significantly scaled back. Moreover, John Lee, Hong Kong\u2019s Chief Executive and a former police officer, has\u00a0urged<\/a>\u00a0the media to tell \u201cthe good stories of Hong Kong,\u201d parroting Chinese President Xi Jinping\u2019s\u00a0emphasis<\/a>\u00a0on \u201cthe good stories of China.\u201d<\/p>\n More broadly, Hong Kong\u2019s long-cherished rule of law is being steadily eroded. Since 2019, the number of foreign judges on Hong Kong\u2019s Court of Final Appeal \u2013 the city\u2019s highest judicial authority \u2013 has fallen from 15 to six, some having\u00a0resigned<\/a>\u00a0in protest. (Foreign judges were installed after the British handover in 1997 to provide expertise and continuity to a long-established common-law system.) The most prominent resignation was that of Jonathan Sumption, a former British Supreme Court Justice, who\u00a0warned<\/a>\u00a0that Hong Kong\u2019s rule of law was being jeopardised by the oppressive political environment created by China and continual calls for \u201cjudicial patriotism.\u201d<\/p>\n Equally telling are the tight linkages between the growth fluctuations in the Chinese and Hong Kong economies, leaving the latter in a vise. From 2012 to 2024, Chinese\u00a0GDP growth<\/a>\u00a0averaged 6.1%, a four-percentage-point deceleration from the 10.1% trend over the previous 32 years (1980 to 2011). Similarly, over that same period, Hong Kong GDP growth averaged just 1.5%, a 3.6-percentage-point deceleration from the 5.1% trend over the prior 32 years.<\/p>\n According to the International Monetary Fund\u2019s\u00a0latest forecast<\/a>, Chinese GDP growth is expected to slow further, to 3.4% by 2030. With the two economies effectively joined at the hip, that puts the risk to Hong Kong economic growth on the downside, very much at odds with the IMF\u2019s forecast of a mild reacceleration in the city\u2019s GDP growth to 2.3% in 2030.<\/p>\n I was in Hong Kong last week to speak at a\u00a0major conference<\/a>\u00a0on US-China relations. There was a bull\u2019s-eye on my back when I addressed a roundtable entitled \u201cBeyond the Middleman: Hong Kong\u2019s Influence in Superpower Rivalry.\u201d The question under discussion was whether Hong Kong\u2019s unique features allow it to play an independent role in tempering geopolitical rifts, such as the one between the US and China. Drawing on the arguments above, I politely argued that, since 2019, Hong Kong\u2019s capacity to serve as an honest broker in the Sino-American conflict has been compromised by China\u2019s heavy hand.<\/p>\n No one in the room agreed with me. According to them, I was ignoring Hong Kong\u2019s greatest strength: its singular legacy of resilience and reinvention. Locals chafe at the suggestion that Hong Kong has become just\u00a0another big Chinese city<\/a>. I was reminded of that when I left the airport and looked up at that familiar sign. Steeped in denial, \u201cAsia\u2019s World City\u201d is clinging to its old identity and reputation.<\/p>\n *Stephen S. Roach, a faculty member at Yale University and former chairman of Morgan Stanley Asia, is the author of\u00a0Unbalanced: The Codependency of America and China<\/a>\u00a0(Yale University Press, 2014) and\u00a0Accidental Conflict: America, China, and the Clash of False Narratives<\/a>\u00a0(Yale University Press, 2022).\u00a0Copyright: Project Syndicate<\/a>, 2025, published here with permission.<\/p>\n","protected":false},"excerpt":{"rendered":"The sign at Hong Kong International Airport still says, \u201cWelcome to Asia\u2019s World City.\u201d Normally worth nothing more…\n","protected":false},"author":2,"featured_media":160783,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-160782","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/160782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=160782"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/160782\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/160783"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=160782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=160782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=160782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}