Hong Kong: from gateway to highway

The official Hong Kong Government online portal describes Hong Kong as “a vibrant city and a major gateway to China”. With China developing its own gateways is this description still valid?

Click image to zoom Tap image to zoom

Hong Kong may be losing its edge, especially in merchandise trade.

"What does it mean for Hong Kong if Shenzhen becomes just as wealthy and a larger “gateway” to China?”

Click image to zoom Tap image to zoom

As a “gateway”, Hong Kong was essentially a port, a locus for the interchange of physical goods.

In 2001 it was the world’s busiest port. In 2006 it had dropped to number two – behind Singapore. By 2011 Shanghai had surpassed both, dropping Hong Kong to three. And in 2016 Hong Kong was down at five with three Chinese ports – Shanghai, Shenzhen and Ningbo-Zhoushan – and Singapore above it.

Click image to zoom Tap image to zoom

This is an economic story but it is interesting to look at the data alongside Deng Xiaoping’s prophesy concerning the Basic Law and China’s Two-centennial policy.

The Basic Law Article Five states “the socialist system and policies shall not be practiced in Hong Kong SAR and the previous capitalist system and way of life shall remain unchanged for 50 years”.

If we consider forecasts of GDP per capita, Hong Kong will remain far wealthier than China as a whole for well beyond the 50 years. But not Shenzhen…

Click image to zoom Tap image to zoom

What does it mean for Hong Kong if Shenzhen becomes just as wealthy and a larger “gateway” to China? I think we will see Hong Kong become more of a 'highway' than a “gateway” – a fast connection, both literally and digitally.

Far more of Hong Kong’s trade will be services.

Click image to zoom Tap image to zoom

And far more of those services will reflect Hong Kong’s digital connectivity, with finance and technology services as major growth drivers.

Click image to zoom Tap image to zoom

We may see this in the increasingly digital world of financial services and a far greater role for virtual trade instruments – whether smart contracts or blockchain-based trade finance documents – to play in more traditional gateway activities.

Click image to zoom Tap image to zoom

Free flow of information remains the cornerstone for this city. Hong Kong’s gateway role will be transformed digitally. And the opportunity to be a highway will be more attractive than just being a gateway.

  • This is an edited version of Raymond’s opening presentation to ANZ’s Horizons Economic Outlook event in Hong Kong this month. bluenotes will also be publishing a account of the panel debate at the event, Blockchain and Crytpocurrencies – their impact in the their economy featuring experts from the Hong Kong Monetary Authority, PwC, Ashurst and ANZ. Make sure you are subscribed to our newsletter so you don’t miss out.

Raymond Yeung is Chief Economist, Greater China at ANZ

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

editor's picks

14 Sep 2016

How the rising sun shines on the long white cloud

Grant Knuckey | Chief Executive Officer, Japan, ANZ

For at least the last five years, the discussion around foreign investment in New Zealand has focused on China. It’s not surprising given over that period Chinese (including Hong Kong SAR) direct investment into the country has increased fivefold, from a cumulative total of about $NZ1 billion in 2010 to well over $NZ5 billion in 2015.

20 Oct 2015

The social enterprise shift in Hong Kong

Tom Cropper | Freelance Social Enterprise Journalist

Last year the eyes of the world turned to Hong Kong as the Occupy Central movement set up camp in the city's financial district. However, elsewhere a much quieter revolution is taking place in the form of social entrepreneurism.