The sceptics say Hong Kong is over. China’s trajectory says otherwise

Before the Covid-19 pandemic, mainstream global economic research institutions widely predicted that China would surpass the US in economic size by around 2030.

In fact, measured by purchasing power parity (PPP), China is already the world’s largest economy. This method is straightforward. For instance, if a hamburger is selling in Shanghai for 20 yuan (US$2.8) and in New York City for US$20, this would imply a PPP exchange rate of 1 yuan to 1 US dollar.

Although British occupation played a significant role, Hong Kong’s status as a global financial centre has long been closely tied to the development of mainland China, rather than being a gift from the United States or the United Kingdom. Among the former British colonies in the Asia-Pacific, perhaps it is only Hong Kong and Singapore that have maintained economic prosperity.

Hong Kong’s current difficulties and challenges stem from several sources. First, mainland China’s economy has not fully recovered from the three-year impact of the pandemic. Second, as China’s economic development approaches the level of developed economies, its growth rate may slow down, a trend that is in line with economic development theory. Third, the US leveraging its global financial dominance to suppress China has a direct impact on Hong Kong.

By 2035, China’s goal is to become a developed economy, with per capita GDP exceeding US$20,000 and total economic output becoming the largest in the world. If all goes according to plan, the economic growth rate is likely to remain around 5 per cent in the coming years. As the economy grows, financial demand will also expand, creating opportunities for Hong Kong to grow its financial market.

G. Bin Zhao is founding chairman of the Global CEO Institute