Hong Kong’s ‘Mainlandization’ Offers Japan Chance to Be Asia’s Financial Center

‘The most important thing to become an international financial center is trust from the United States,’ Takafumi Maki, a Japanese financial professional, wrote.

People pass next to Hokan-ji Temple (also known as Yasaka Pagoda) in Kyoto, Japan, on Oct. 14, 2021. Carl Court/Getty Images

Since Hong Kong passed the National Security Law and Article 23 legislation, its position as an international center has been rapidly replaced by other cities. Japan, once known as the “Asian financial center” in the 1980s, sees the current situation as a great opportunity to reclaim the title.

Hong Kong, an international financial center for years, used to attract investors from all over the world. However, after the National Security Law was introduced in 2020, foreign investors started to withdraw, worrying about its impact on the city’s business environment. Starting in 2022, Singapore replaced Hong Kong as the third largest international financial center after New York City and London.

Article 23 Worries Foreign Companies

In 2023, the Hong Kong stock market was bleak with a cumulative decline of over 14 percent, making it the worst-performing market in the Asia-Pacific region.