Heiwai Tang

Opinion | Hong Kong must reindustrialise to reinvent its economy

With neighbour Shenzhen poised to pull ahead, Hong Kong needs an economic transformation of its own: it must end its reliance on the financial industry

The city should focus on creating rewarding, good-paying jobs that benefit more than a few by upgrading its workforce and developing a new manufacturing sector based on science and technology

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Heiwai Tang

Published: 8:45am, 30 Oct 2020Updated: 9:43am, 30 Oct 2020

As US-China tensions continue to escalate amid the Covid-19 pandemic and a global trend of deglobalisation, Hong Kong’s role as an economic gateway between mainland China and the rest of the world is likely to shrink in the foreseeable future.

The four pillar industries identified by the government – financial services, tourism, trading and logistics, and professional services – managed to maintain a stable share of Hong Kong’s gross domestic product (about 58 per cent) only because of the continuous expansion of one industry, financial services.

Tourism’s contribution to the economy had declined in recent years before it was brought to its knees by the pandemic. Trade and logistics has shown the same downward trend since 2008, because many Chinese companies no longer export through Hong Kong’s intermediaries. An analysis of Hong Kong’s population census data reveals that more low-income jobs, particularly in retail and personal services since 2011, have replaced the jobs lost in tourism and trade and logistics.

President Xi Jinping, in a highly anticipated speech to mark the 40th anniversary of Shenzhen as China’s first special economic zone, urged Shenzhen to take the lead in reform and become a technology powerhouse. It is widely accepted that Hong Kong can naturally play the role of financial hub for the Greater Bay Area.

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But how long can Hong Kong continue to rely on finance, which has contributed to rising inequality in the city, as its growth engine? Can the city make itself more relevant in contributing to China’s economic development, like in the old days, besides simply being a financier?