Will Hong Kong Economy ever be The Same again ?

Since the first massive protest hit Hong Kong on June 9, the international financial hub has been beset by chaos, insecurity, and an economic downturn. Commercial, trading, logistics, and financial hub like those of Singapore, Hong Kong, Dubai, Malta, Frankfurt, Antwerp, Rotterdam, etc. became successful and prosperous because of several factors, namely. Strategic location, ease of doing business, pro-business policies, low taxation, Entrepôt status, highly educated and DISCIPLINED workforce, RULE of LAW, RESPECT for AUTHORITY, PEACE, and STABILITY. Destroy these very foundations, either through wars, conflicts, political infighting. And all you'll have is economic stagflation, despair, homelessness, suicides. Just look at Beirut today, it was the Dubai of the 70s and 80s Today protests and the US-China trade war hang heavy at the turn of the decade. Tourism and retail sales both crucial parts of Hong Kong’s economy are both slumping, as months of pro-democracy protests weigh heavily on one of the world’s financial hubs. Can Hong Kong protest stop in 2020? That is the real question, Or will honk Kong never be the same again? The Chinese central government just announced to start a stock and bond trading center in Macau. Also, off-shore RMB clearing is going there. So is Hong Kong going to be simply replaced by Macau. Welcome to The Atlantis Report. Protests in Hong Kong have prompted China to speed up its vast regional development program, the Greater Bay Area Project. Beijing has long planned this but believes the promise of strong economic growth will ease anger in Hong Kong - which will lose its special status in 28 years when there will no longer be a guarantee of the "one country, two systems" policy. The government wants to make Hong Kong a key part of a cluster of cities in the Pearl River Delta to create vibrant economic areas. Chinese president Xi Jinping describes the Greater Bay Project as central to China's "Great National Rejuvenation." Hong Kong is just a part of a greater plan. WHY HONG KONG. Freedom of the economic system and legal certainty. Strategic positioning within the Asian region. Quality of services and economic environment. Quality of the infrastructures. Progressive integration with the People's Republic of China. Given its natural openness to international trade, Hong Kong remains a staunch supporter of multilateralism. However, RAS has concluded some bilateral agreements that can strengthen its position as an Asian financial hub and ensure even more favorable conditions for the export of goods and services to international markets. CEPAs with China and Macao and agreements with EFTA, Chile, New Zealand, and Georgia are in force today. Two, however, are the agreements signed not yet in force: on November 12, 2017, the FTA was signed with ASEAN, which represents an important tool to strengthen Hong Kong's position as a gateway for Chinese investments in Southeast Asia, also with a view to the projects that will be implemented as part of the Belt and Road strategic initiative. On March 26, an FTA was also signed with Australia. Finally, the RAS has concluded the negotiations that will lead to the signing of an agreement with the Maldives. According to the Heritage Foundation's Index of Economic Freedom, Hong Kong remains the freest economy in the world. The City has an agile and efficient bureaucracy, certain rules, and facilitated taxation. The adoption of international business methods, the diffusion of the English language, and the environment conducive to technological innovation ensure the generation of continuous opportunities in exchanges, investments, and the recruitment of qualified personnel. All these characteristics contribute to making this market very attractive to foreign investors. The leading sector of the economy is the tertiary sector, which represents around 93% of GDP. In this context, the most important sectors of the economy remain wholesale and retail trade (22.7% of GDP), finance and insurance (17.6%), public administration and social services (17, 5%), real estate and professional services (10.9%), postal, storage and transport services (6.5%). Hong Kong is a platform of excellence for relations with mainland China and the rest of the world: its merchant port is the sixth in the world for container handling behind Shanghai, Singapore, Shenzhen, Ningbo-Zhoushan, and Busan. Its airport, repeatedly classified as one of the best in the world, is one of the main hubs in the region and the eighth busiest on a global scale in terms of passengers. With a view to a progressive strengthening of economic integration between China and Hong Kong, the CEPA (Closer Economic Partnership Arrangement) was signed in 2003, which entails exemption from duties for a range of products and the gradual liberalization of some sectors of activity. On August 29, 2013, CEPA Supplement X was signed. The signing of the Agreement for the basic liberalization of trade in services between Guangdong and Hong Kong represented a further step forward for the implementation of CEPA, to which was added the Agreement for the liberalization of trade in services. , entered into force on June 1, 2016, the agreements on investments and technical and economic cooperation, which entered into force on January 1, 2018, and the bilateral agreement on trade in goods, in force since January 1, 2019. In February, the Greater Bay Area development plan was published, considered a key component of the national development strategy, in which Hong Kong appears destined to play a central role. At the economic level, Hong Kong entered a technical recession in the third quarter. In fact, real GDP experienced a drop of 3.2% compared to the previous quarter, which follows the 0.5% contraction recorded between April and June. In the period under consideration, the economy recorded a drop of 2.9% on an annual basis, the worst result since 2009. The collapse of tourism flows from China, combined with the deterioration of the propensity to consume as a consequence of the social tensions of these months, led to a 3.5% drop in private demand. The situation of widespread uncertainty also contributed to depressing the investment propensity of companies, which was reflected, in particular, in the fall in gross fixed investments (-16.3%). The difficult international economic situation, on the other hand, continued to weigh on foreign exchange. The export of goods fell by 7% on an annual basis. A similar trend marked the import, which decreased by 11.1% (-6.7% in the second quarter). Even more marked was the deterioration in the performance of exports in the services sector (-13.7% compared to -1.1% in the second quarter), against a 3.8% drop in imports ( -1.3% in the previous quarter). Hong Kong remains the main operating platform for foreign companies active in Asia. The most represented sectors concern finance, logistics, and fashion/luxury. In addition to the traditional sectors of the Hong Kong economy, those of new interest to foreign investors and in which a greater presence of foreign companies would be desirable are bio and nanotechnologies, energy from renewable sources/environment, buildings/materials ecological and creative industries. Moreover, innovation is at the center of the City's economic development policy. The Administration's estimates of start-up growth confirm, in particular, the high potential of this sector. It is in light of these considerations that Startit Asia was launched in 2017, a program aimed at exploiting the Hong Kong platform to encourage the expansion process in Asia of start-ups with high growth potential and high innovation. Similar reflections led to the birth of the Greater Bay Area Innovation Road, an initiative aimed at foreign companies wishing to forge new industrial and technological collaborations in one of the most dynamic and innovative areas of China and the world. Although its population amounts to just over 7 million people, this Special Administrative Region constitutes the third destination market for European suppliers in Asia behind China and Japan, by virtue of the well-known openness to multilateral trade of its economy. And strong commercial ties with the People's Republic. About half of European exports to the Special Administrative Region are, in fact, re-exported to neighboring markets, starting with the PRC (where almost 60% of foreign re-exports are concentrated ), followed by Macao, South Korea, Taiwan, Singapore, and Japan. European exports to Hong Kong, which remains one of the main luxury squares worldwide and an Asian platform for fashion houses, are driven by clothing and leather goods. Other important sectors are represented by jewelry, food, chemical-pharmaceutical, machine tools, motor vehicles, electrical, and mobile equipment. HONG KONG's ECONOMIC POLICY. On February 27, the Financial Secretary, Paul Chan, presented the budget for the 2019-2020 fiscal year. The financing of the economic and social development policies illustrated by the Chief Executive Carrie Lam in its latest Policy Address is divided into three lines: support for businesses and the economy, safeguarding employment, strengthening services for the community, and measures social protection for the weaker sections of the population. The pursuit of these objectives provides for appropriations whose use respects the principles of sound financial management set out in Article 107 of the Basic Law: containment of expenditure within the limits of revenue, the achievement of budget balance and implementation of a budget whose dimensions are commensurate with the GDP growth rate. The Financial Secretary, in particular, reiterated the need to optimize the use of resources and to maintain solid fiscal discipline with a view to safeguarding the assets of public finances. Innovation and technology, recipients of one-third of the allocations, take on central importance in the new budget. Appropriations of approximately 4 billion euros are expected to support basic research in universities, plus 620 million for the expansion of Cyberport, the City's second technology park. The attention paid to the university system appears functional to the intensification of the synergies between Hong Kong (at the top of the international rankings in numerous scientific fields) and Shenzhen (where research conducted in the RAS can find application outlets). The collaboration between the two centers in innovation and technology is, in fact, one of the main chapters of the development plan of the "Greater Bay Area." To fuel the confidence of a production fabric made up mainly of SMEs, the Government also provides for a 75% reduction in the corporate profits tax, the waiver of the annual company registration tax and incentives aimed to increase their propensity for innovation and competitiveness. Deductions and other tax concessions are also provided on the incomes and profits of natural persons, intended to increase disposable income and support demand. Lastly, about half of the current expenses will finance construction projects, social assistance, and modernization and improvement of the public health system. In Hong Kong, the democratic dynamic is quite lively, supported not only by a free press and by respect for fundamental freedoms, but also by the mentality and western education of a significant part of the population. The Legislative Council is made up of 70 members, of which 35 elected by the proportional method and by direct universal suffrage in the so-called geographical colleges, 5 (always by direct universal suffrage) within the so-called super-seats introduced in 2012 and reserved for those who already hold the position of District Councilors, and the remaining 30 representing professional categories, in the so-called functional colleges. In the Legislative Council - which is based on a multi-party system - two main alignments are compared. a) The pro-government, which controls 43 seats. Major political forces include the Democratic Alliance for the Betterment and Progress of Hong Kong, very close to Beijing, the Business and Professionals Alliance for Hong Kong and the Federation of Trade Unions. The majority party, the traditional supporter of the City's large economic lobbies, aims to maintain the current order of power. b) The Pan-Democrat made up of 24 deputies, whose major parties (including the Democratic and the Civic) are committed to full democratization and the defense of Hong Kong's traditional core values ​​(the rule of law and respect fundamental freedoms). The power of the Legislative Council is substantiated in the approval of the bills presented by the Executive, in the vote on the budget, and in activities of direction and control over the Government. At the head of the executive power sits the Chief Executive, whose appointment - ratified by Beijing - is the result of the appointment of an Electoral Committee (of 1,200 members), including representatives of the various professional categories, members of the Legislative Council and deputies from Hong Kong within the Chinese Parliament. The absence of a chief executive direct universal suffrage voting method triggered Occupy Central's civil disobedience campaign in 2014. Once the echo of the protests subsided, the focus of the political debate gradually shifted to socially topical issues such as the widening of economic inequalities, pollution, and the housing crisis. The current leader of the Administration is Carrie Lam, the first woman to hold this position in the history of Hong Kong. Elected in March 2017 with 777 votes out of 1.194, she started her mandate on July 1, 2017. Finally, the application of the law is entrusted to an independent and impartial judicial power. The jurisdictional order of Hong Kong is completely independent of that of mainland China and continues to be based on the principles of Common Law inherited from the British legal tradition.   POLITICAL-SOCIAL CRISIS TRIGGERED BY THE EXTRADITION LAW DESIGN. The demonstrations triggered by the extradition bill, underway since June, also continue with clashes with law enforcement. Arrests and hospitalizations occurred to the detriment of the participants. In general, demonstrations cannot be ruled out in any area: so far, they have occurred both in fewer tourist areas and in all the central districts of Hong Kong Island. On August 5, air and metropolitan transport were hit hard by the general strike called by dozens of trade unions. It is therefore recommended to always check the status of connections with airlines and transport before setting off and to monitor the state of road traffic and public services through local media. The events, which for several months took place mainly during the weekend, are now taking place over the entire week. In Conclusion. Hong Kong continues to present strong growth opportunities, especially in the consumer-centric business sector. Hong Kong follows an innovation-based growth path and last year ranked seventh in the Global Innovation Index. Another facet of Hong Kong's competitive advantage is its place in China's Greater Bay Area, which seeks to integrate the Pearl River Delta economies. This was The Atlantis Report. Please Like. Share. And Subscribe. Thank You.
















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