Hong Kong's International Financial Centre: Retrospect and Prospect

Recommendations

Info

for such outcomes. But strikingly different were the political engines lying underneath those miracles. In the history of global capitalism, comparative analysts have identified a principal distinction across economically successful societies. Some have been led by strong states—like France and Japan, while others, like England and the United States, have been led by strong societies. For present purposes, arguing over very subtle differences is beside the point. Looked at together, the evidence of experience suggests quite plausibly that contemporary Singapore would not be what it is today in the absence of central state institutions capable of pushing its society forward in a challenging external environment. In contrast, Hong Kong developed a strong society capable of adapting quite effectively with little central direction to intense political struggles constantly buffeting it from without and from within. Economic and political freedom is very hard to quantify. But even the casual observer would be hard pressed to make the argument that the average Singaporean has throughout the modern era been freer than the average resident of Hong Kong. Matthew Harrison of the Hong Kong Exchange convincingly captured the essential difference between Singapore and Hong Kong in the character of governments that built two distinctive financial economies. 24 In Singapore, government played the role of leader; it believed in industrial policy and it implemented such a policy through targeted tax concessions, strict regulation, and sectoral planning. In Hong Kong, government played the role of facilitator; it restrained its tax policies and kept individual and corporate taxes low across the board, it intervened directly in its economy on an ad hoc basis, mainly in response to emergencies, and it adjusted its regulatory framework as required by periodic scandals. In Singapore a centralized government promoted new industries and encouraged the development of locally based ‘offshore’ markets. In Hong Kong, a government with widely distributed powers accommodated often opaque linkages between public and private sectors that, relatively speaking, permitted deep interaction between domestic and international markets. Until recently, the focal point of this interaction has been in the banking sector, and the following chart provides a rough sense of an important effect of policy differences over time. 24 Matthew Harrison, “The Hong Kong and Singapore Markets Compared,” Hong Kong Securities Institute, Regional Market Update Series, 27 May 2010. 32
Both policy paths led to sound and vibrant financial markets, but in Singapore those markets are dominated by large state-owned institutions like the Development Bank of Singapore, while in Hong Kong most major market makers are private and relatively small (with the historic exception of the Hong Kong and Shanghai Banking Corporation). Similarly, the Monetary Authority of Singapore plays the most prominent role in regulating and supervising all of Singapore’s financial sectors, including securities, futures, foreign exchange, insurance, and banking. In Hong Kong, these functions are broken up across the Hong Kong Exchange, the Securities and Futures Commission, the Office of the Commissioner of Insurance, the Hong Kong Monetary Authority, and various self-regulatory organizations. The functional constituency system in Hong Kong’s legislature may also be presumed to have a distinguishing impact in terms of both what is done by regulators and what is not done. One fact looms very large in accounting for the way in which such differences have evolved across the two cases. Singapore’s natural economic hinterland is southeast Asia and India, and in the absence of a high degree of centralization and a strategic orientation toward global markets, it would not have developed as quickly and as autonomously as it did during the past half century. Hong Kong’s hinterland is China, and in the absence of a decentralized and adaptable system, it would not have been in a position fully to take advantage of the opportunities a booming China placed in its path since the 1970s. 25 As an excellent recent and fine-grained study on Hong Kong’s IFC underlines, however, proximity to the Mainland has been a double-edged sword in terms of shaping and constraining competitive advantages. It is true that Hong Kong’s financial sector shines brightly because of its stock market and the IPO activity taking place there, because of its longstanding regional leadership in banking, and because of its expanding expertise in funds management. When 25 Ibid. 33
Page 1 and 2: Hong Kong’s International Financi
Page 5 and 6: however, and widespread allegations
Page 9 and 10: 2. Analytical Background Foundation
Page 11 and 12: finance. 3 Not by coincidence is it
Page 13 and 14: Hong Kong took a different stance.
Page 15 and 16: ___________________________________
Page 17 and 18: Value Added The Four Key Industries
Page 19 and 20: Employment Numbers The Four Key Ind
Page 21 and 22: ___________________________________
Page 23 and 24: The legacy of past investments is a
Page 25 and 26: ___________________________________
Page 27 and 28: egional and global economies in the
Page 29 and 30: ___________________________________
Page 31: ___________________________________
Page 35 and 36: Singapore and Hong Kong Financial M
Page 37 and 38: ___________________________________
Page 39 and 40: ___________________________________
Page 41 and 42: Kong’s role as a financial centre
Page 43 and 44: In this regard, it is entirely poss
Page 45 and 46: By 2010, 145 banks operated as lice
Page 47 and 48: Given its strategic location and th
Page 49 and 50: exceeded US$50 billion. With 78 com
Page 51 and 52: mismanaged. In the wake of the cris
Page 53 and 54: expanded, volumes grew by 400% over
Page 55 and 56: income instruments, foreign-currenc
Page 57 and 58: insurers include AIA (Bermuda), Man
Page 59 and 60: 7. The Changing Role of Government
Page 61 and 62: Police Force and the Hong Kong Cust
Page 63 and 64: focus on the other financial policy
Page 65 and 66: their nominal value, depending on t
Page 67 and 68: contribute to dilemmas of various k
Page 69 and 70: to defend their interests in its co
Page 71 and 72: First, governments across the advan
Page 73 and 74: segmentation, slowed down but not s
Page 75 and 76: the vital importance of monetary st
Page 77 and 78: 9. Finance, Autonomy, and the Achie
Page 79 and 80: they have always done so. For compe
Page 81 and 82: they collectively ‘solve’ the m
Page 83 and 84:
policies. With such images and such
Page 85 and 86:
such a context, the range of financ
Page 87 and 88:
surveys of universities and their r
show all

Hong Kong's International Financial Centre: Retrospect and Prospect

Create successful ePaper yourself

Delete template?

Save as template?