Geopolitics and Hong Kong as international financial centre: a dynamic IPE perspective

ABSTRACT

This article examines the impact of US–China geopolitical tensions on Hong Kong as an IFC, and how Hong Kong is coping. Utilizing a dynamic IPE perspective, it details how Hong Kong officials, financial market actors and corporations have responded to the punitive US measures against Hong Kong and China in 2020 and 2021, measures that are tantamount to commercial and financial warfare on China and the city, but also that work against the interests of US corporates in Hong Kong. The analysis highlights Hong Kong’s competitive resiliency as an IFC, from 2019 to early-2022, and the sources of its resiliency.

KEYWORDS:

• Hong Kong
• international financial centre
• United States
• China
• National Security Law
• resilience

Acknowledgement

The interpretations and recommendations in this piece are solely the responsibility of the author. Some sources for this study shall remain anonymous to maintain confidentiality. My thanks especially to Tai-lok Lui the guest editor, journal editor Ingyu Oh, and Benjamin J. Cohen, Louis Pauly and Vic Li for their detailed suggestions, Nicholas Kwan, former Director of Research at the HKTDC for his personal comments, Rachael Bedlington, Mark Blyth, Esther Cheong, Gisuseppe Gabusi, Daniel Koldyk, Alex Koustas, Robert Latham, Christopher McNally for their suggestions on earlier drafts, and the journal’s two anonymous reviewers.

Disclosure statement

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

Notes

1. By a dynamic IPE perspective, I mean a mode of social scientific analysis that examines the inter-relations between politics and economics and the international and domestic realms to comprehend social reality, and where the main goal of the analysis is to understand the sources of systemic change, the potential for, and drivers of structural change.

2. I thank one of the anonymous reviewers for raising this point.

3. The main ‘limitations of the research’ is that, due to COVID-19 travel restrictions, the author was not able to conduct in-person field research and data gathering for this paper, on the macro or micro-dimension of the study, in Hong Kong, China and the US. The analysis has relied mainly on textual analysis, and on data from the HKMA and the IMF. The author believes the data is reliable.

4. Under the “special status” category of the United States, Hong Kong’s exports to the US treated separately from the Mainland’s more managed economy,; Hong Kong had a zero tariff on import of US goods; and the US allowed the US dollar to be “freely exchanged” against the Hong Kong dollar.

5. Author’s notes on Paul Chan’s presentation to the Asia Pacific Foundation of Canada on Hong Kong’s competitiveness as an International Financial Centre, May 11, 2021.

6. Author’s notes on Paul Chan’s presentation, May 11, 2021.

7. Another key factor was the US decision to only impose limited or measured financial sanctions.

8. TIAA is one of the leading retirement pension providers in the US for people in the education, not-for-profit, healthcare and government fields.

9. EO 14032 created a new “Non Specially-Designated Nationals Chinese Military-Industrial Complex Companies (NS-CMIC) List”, administered by the US Treasury Department’s Office of Foreign Assets Control (OFAC). 59 entities were on the list as of October 25, 2021.

Additional information

Notes on contributors

Gregory T. Chin

Gregory T. Chin is an Associate Professor in the Department of Political Science, and Faculty of Graduate Studies at York University (Canada). His research interests are in international and comparative political economy with a focus on China, Asia, the BRICS, international money, finance, and global governance. His research on China, the Asian region and world order started in the early 1990s, and spans four decades. His most recent projects are ‘US Financial Warfare on China’ (to be published in Italian by Istituto Treccani, Visions Series), and ‘Canada Amid the US-China Trade War’ published in Canada Among Nations 2021. His report ‘EGG Commentary Series: The Evolution of the New Development Bank (NDB) at Six and Beyond’ is posted online by Global Policy Journal.