Hong Kong's International Financial Centre: Retrospect and Prospect

surveys of universities and their reputations. The Times Higher Education Supplement now
ranks the University of Hong Kong as the top in Asia and the Hong Kong University of Science
and technology as sixth among the top ten. In 2010, QS Asian University Rankings placed
HKU, HKUST and the Chinese University of Hong Kong in the first, second, and fourth
positions respectively. Other respected surveys are less generous, and all advanced economies
are now struggling with the questions of what constitutes promising research and how it should
be supported. It is clear, however, that policymakers in Hong Kong do understand and care
about the heightening competition across the region and around the world to nurture the
brainpower required to keep Hong Kong competitive, prosperous, and again relatively
autonomous. This should lead them to increase long-term investments in a vibrant university
system.
With regard to the financial sector, a two-track strategy has much to commend it. Hong
Kong can offer its experience and expertise to Mainland cities seeking to build modern financial
markets, while also continuously enhancing the globally competitive advantages of its IFC.
Regularly benchmarking against New York, London, and Singapore should spur the latter effort
along.
More broadly, it remains important to remember that all four pillar industries of Hong
Kong’s contemporary economy are not static, nor should they be seen as reflective of final
strategic choices. It is true that most governments around the world are not good at picking the
specific firms that might become winners in the future. But they are very good, indeed
irreplaceable, at funding and shaping the environment within which basic and applied intellectual
work can flourish and sow the seeds for new industries. Fair competition in markets open to the
fruits of that work must also be ensured by pro-active policies. 80
To sustain Hong Kong’s
position in vital information-based industries like commercial banking, investment banking, and
insurance, but certainly for broader reasons as well, present and future governments must take
seriously the challenge of nurturing a competitive innovation system.
As the data arrayed above indicate, maintaining an IFC in the top global tier will not
generate the quantity or quality of jobs needed by the next generation of Hong Kong’s residents.
New industries will be required. Finance should remain a key contributor to future prosperity,
but none of the world’s leading IFCs are disconnected from real economies. Certainly Wall
Street and the City of London are not disconnected from markets where a widely diversified set
of goods and services are actually produced. If some of their financial leaders thought otherwise
before 2008, their views were thoroughly discredited by events. In the end, the fiscal resources
ultimately generated by substantial and substantially productive real economies were all that
80 Although the process has been drawn out, the Competition Bill moving toward final action was designed to
address the failings of voluntary compliance with competitive norms and to ensure efficient markets. Of the many
issues relevant to a healthy IFC under consideration, competitive conditions among brokers and dealers in the
HKEx, among mortgage providers, among land developers, and among providers of telecommunications services
deserved scrutiny. For background, see HKSARG Competition Policy Review Committee, Report on the Review of
Hong Kong’s Competition Policy, June 2006; Legislative Council Brief: Competition Bill, CITB CR 05/62/43, July
2, 2010; Mark Williams, Competition Policy and Law in China, Hong Kong and Taiwan, Cambridge: Cambridge
University Press, 2005.
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