The risk is not
n
hmm.
my only political. There
is the excranie
Mik: inflaten
and over-heating
in the Chine
economy
3 -
labour force in Southern China is becoming increasingly skilful and the infrastructure investment there is becoming more closely tied into Hong Kong than into the rest of China. Assuming low and constant China political risk, the prospect therefore is that Hong Kong will increasingly supply directly, or after a few years
perhaps indirectly via branches/ subsidiaries, the financial and
other services to the booming South. To the extent that China's
reform process gathers pace, Hong Kong will be best placed to
provide a major share of the services this will need. Over time it is likely that Hong Kong will increasingly become the major services centre for China and less, relatively, a broadly-based
regional financial centre.
1.7 Second, assuming that South East Asia and the Far East
continue to be the World's fastest growing region, there will be a
commensurate rapid increase in the demand for international financial and other services. Both Hong Kong and Singapore, as well
as of course London and UK financial firms, and other regional
centres, like Sydney, Taipei and Seoul, can probably be
accommodated in this process. However, existing centres will lose
market share. While no doubt many international financial firms
will retain operations in Hong Kong to participate in the
development of the Chinese economy, the increasing integration of
China and Hong Kong will mean that Singapore develops into the
stronger, more broadly-based regional financial centre, serving the
new generation of NIES, Indonesia, Malaysia, Thailand and in time
perhaps the Philippines and Vietnam.
1.8
yes, but they are also building up their comertically driven markets. As noted above, political developments in Hong Kong or China could dominate other issues in determining Hong Kong's prospects. If the political environment around Hong Kong deteriorates
significantly for instance via the re-establishment of conservative influence in China, social unrest in Hong Kong or Chinese interference in Hong Kong affairs- it is highly likely that international companies would relocate their business away. This might also occur, but perhaps more gradually, if the atmosphere of the UK-Sino-Hong Kong negotiations about Hong Kong's future becomes less productive, with a number of 'difficult' issues still to discuss. The recurrent problems over the airport financing may not bode well. However, provided over the longer term the sino- Hong Kong political scene does not interfere, and assuming Mr