The Sinicisation of the Hong Kong economy or the Hongkongnisation of the Greater Bay Area: are we ‘barking up the wrong tree’?

ABSTRACT

The post-1997 massive inflow of capital led to a call to resist the Sinicisation of Hong Kong’s economy, while pragmatic advocators called for a pro-active leadership role for Hong Kong under the national initiative of the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) – the Hongkongnisation of southern China. Instead of focusing on the form of the institution, as in the dominant academic discourses, we argue that the credibility and sustainability of the financial market in Hong Kong is determined by the specific functions that it can perform for the Chinese economy under the constraints of ‘One Country, Two Systems’ (OCTS).

KEYWORDS:

• institutional form
• institutional function
• finance
• Sinicisation
• Hongkongnisation
• Greater Bay Area
• Hong Kong

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. The original meaning of sinicisation is about the influence of Chinese culture on non-Chinese societies (Owen 2005). We define this term broadly to incorporate the rising influence of Chinese economic influence in Hong Kong.

2. This section relies heavily on Yeung (2021, 201–202).

3. See Kydland and Prescott (1977) and Blackburn and Christensen (1989) for the neo-classical and neo-liberal views of the theory of policy credibility.

4. Hong Kong Exchanges and Clearing (HKEX) acts as the trading platforms of financial instruments through its three wholly owned subsidiaries: Stock Exchange of Hong Kong (SEHK), Hong Kong Futures Exchange (HKFE) and London Metal Exchange (LME).

5. China’s share of Hong Kong’s global trade increased from 9.3% in 1978 to 51.8% in 2020 (Our Hong Kong Foundation 2021). As a comparison, the average daily transaction of foreign currency in China was US$136 billion (accounted for 1.64% of the world) in 2019 (BIS 2019a).

6. Hong Kong ranks behind New York, London and Shanghai, but ahead of Singapore, Beijing, Tokyo and Shenzhen in the latest Global Financial Centres Index (GFCI) report (Wardle and Mainelli 2021).

7. Chinese companies listed in the US are not allowed to let US’s SEC to inspect their financial audits due to the China Securities Regulatory Commission’s regulations on confidential information, i.e. such audit reports contain ‘state secrets’.

8. Green finance refers to private investments into green industries (such as environmental protection, energy conservation and clean energy) through financial services, e.g. green bonds, green loans and green insurance. HKEX acquired a 7% of Guangzhou Futures Exchange’s equity with 210 million yuan (US$32.45 million) in February 2021.

9. As an aviation hub, Hong Kong is performing its crucial functions in the global supply chains management, supported by the well-connected air cargo and transhipment hubs and a well-developed logistics industry. The airport has a freight capacity of 7.5 million tonnes per year, which no other airports in the GBA is expected to reach in the next decade (2022 Foundation 2021, 6).

Additional information

Notes on contributors

Godfrey Yeung

Godfrey Yeung is the Associate Professor of Economic Geography at the Department of Geography, National University of Singapore. His research interests include foreign direct investment and international trade, (automotive) production networks and regional development, and financial geographies in China.

Tai-lok Lui

Tai-lok Lui is Chair Professor of Hong Kong Studies and Director of the Academy of Hong Kong Studies at The Education University of Hong. His research interests are in the areas of class analysis, urban sociology, and economic sociology. He is the co-editor of Routledge Handbook of Contemporary Hong Kong and Hong Kong 20 Years after the Handover: Emerging Social and Political Fractures after 1997.