Hong Kong's International Financial Centre: Retrospect and Prospect

policies. With such images and such policies in the background, it is no wonder that many
expatriates found Hong Kong a paradise, at least for a time. But today many officials, current
residents, and friends of Hong Kong harbor deep-seated, often unspoken, doubts. At root, they
are concerned that all now depends on decisions made elsewhere.
Hoping for the best but planning for the worst--for good historical reasons, these features
are deeply embedded in Hong Kong’s culture. Now well into the second decade after the British
handover, many are asking whether Hong Kong must simply resign itself in the near term simply
to serving as a laboratory for Mainland experiments in financial and other types of policies, for
example, those policies allowing the development of offshore RMB markets. They are
wondering if in the longer run, Hong Kong can aspire at most to helping Shenzhen, Guangzhou
and the greater Pearl River Delta attain and maintain a prominent and prosperous place within a
burgeoning China. Perhaps some even find themselves contemplating a shift in their own
centres of gravity within the region as they see municipalities on the Mainland quickly
duplicating Hong Kong’s advantages, like its airport, its seaport, and its internal transportation
systems.
In such a context, strengthening Hong Kong’s IFC must come to be seen as a key element
in a larger project aimed at preserving as much autonomy as possible for Hong Kong as an
essential part of a future China. For the benefit of all of Hong Kong’s residents, this must mean
thinking more strategically—in pursuit of the realizable objective of keeping Hong Kong in a
prominent and prosperous position within the stable and sustainable union China should become.
Thus, the immediate goal inside Hong Kong must be to build adequate-enough private and
public structures capable of defending and bolstering Hong Kong’s distinctive place within
greater China. Deepening the trade and investment linkages between Hong Kong and the
Mainland through, for example, the growing settlement facilities in Hong Kong’s IFC must be
conceived of as part of a much larger and mutually beneficial project. Among other important
tasks, Hong Kong’s leaders must work to ensure that the project has sympathetic supporters
inside China’s Politburo, and especially inside the Standing Committee. Neither markets nor
governing institutions set on auto-pilot are likely to be clever enough, constructive enough, or
durable enough to position the majority of Hong Kong’s people at what we might call the ‘sweet
spot’ between integration and autonomy within greater China.
A resilient IFC in a complex political economy
Powerful global and regional forces now impel the government of Hong Kong to develop
the strategic capacity to design nuanced policies and the fiscal capacity to implement them. The
task of strengthening its IFC should be seen as a key element in a larger agenda.
Hong Kong retains a number of highly useful assets or, to use another terms, policy
instruments that for the time are capable of providing buffers between the ‘two systems’
operating within ‘one country.’ We have discussed them all above. They include: a geographic
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