This Asian tiger is still roaring, but it’s not quite what it used to be beneath the surface.
As part of Beijing’s bargain with Britain in the Sino–British Joint Declaration of 1984, Hong Kong was to retain its capitalist system and “way of life” for a period of fifty years from 1997.
The recent Occupy Central demonstrations and earlier pro-democracy protests in the 2000s show that the Chinese communist regime cannot be trusted to introduce promised democratic reforms in Hong Kong, but socialist Beijing has thus far kept capitalism in the region.
After 1997, Hong Kong’s economy never again reached the fast growth of its development stage, but it did benefit by becoming the investment and trade hub for the mainland.
Integration into the Chinese capital and trade markets has its costs however, as the Hong Kong market started adopting deceptive and illicit practices, such as fake invoice trading and official manipulation of export data.
For instance, businesses disguised money flowing into the mainland as an investment as a payment for goods exported to Hong Kong, which technically is a “foreign territory.” China’s State Administration of Foreign Exchange’s inspection department discovered that $10 billion worth of fraudulent trades were made across China since April 2013, most likely a tiny fraction of the real number.
Because Hong Kong’s economy is more closely integrated with China’s, it has slowed down in times of crisis, such as during the SARS epidemic in 2002 and 2003 and the 2008 global financial meltdown.
Lastly, the Chinese regime’s continued interference in Hong Kong’s civil liberties and autonomy could have an adverse effect on investors’ confidence in the region, and this would ultimately cost Hong Kong its place as one of the true capitalist centers left in the world.
As part of Beijing’s bargain with Britain in the Sino–British Joint Declaration of 1984, Hong Kong was to retain its capitalist system and “way of life” for a period of fifty years from 1997.
The recent Occupy Central demonstrations and earlier pro-democracy protests in the 2000s show that the Chinese communist regime cannot be trusted to introduce promised democratic reforms in Hong Kong, but socialist Beijing has thus far kept capitalism in the region.
After 1997, Hong Kong’s economy never again reached the fast growth of its development stage, but it did benefit by becoming the investment and trade hub for the mainland.
Integration into the Chinese capital and trade markets has its costs however, as the Hong Kong market started adopting deceptive and illicit practices, such as fake invoice trading and official manipulation of export data.
For instance, businesses disguised money flowing into the mainland as an investment as a payment for goods exported to Hong Kong, which technically is a “foreign territory.” China’s State Administration of Foreign Exchange’s inspection department discovered that $10 billion worth of fraudulent trades were made across China since April 2013, most likely a tiny fraction of the real number.
Because Hong Kong’s economy is more closely integrated with China’s, it has slowed down in times of crisis, such as during the SARS epidemic in 2002 and 2003 and the 2008 global financial meltdown.
Lastly, the Chinese regime’s continued interference in Hong Kong’s civil liberties and autonomy could have an adverse effect on investors’ confidence in the region, and this would ultimately cost Hong Kong its place as one of the true capitalist centers left in the world.
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