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Hong Kong economy
OpinionComment
Janet Pau
Janet Pau

The View | Amid slower growth, Hong Kong’s economy must change alongside mainland China

  • Hong Kong has long been a service-based economy reliant on finance, tourism, trade logistics and professional services
  • But as the Chinese economy shifts towards domestic consumption, Hong Kong must change too, to maintain healthy economic and job growth

Reading Time:4 minutes
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Pedestrians on a footbridge in Hong Kong on April 24. Although Hong Kong’s literacy rate and tertiary education coverage are among the highest in the world, this has not necessarily translated into growing earning potential. Photo: Bloomberg
Janet Pau
Hong Kong’s economic growth has been a beneficiary of global market capitalism for decades. But the current realities of supply chain de-risking, the lurch toward more inward-looking, protectionist economic policies and stagflation risks threaten to derail the global economy.
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Hong Kong will not be immune to these headwinds. It may face an extended period of anaemic growth, which amplifies the sense of economic insecurity for its workforce at a time when the future of work is also being transformed by generative AI.
Add to the mix long-standing issues of income and wealth gaps, brought to the fore by the Covid-19 pandemic, the urgency of making progress on environmental sustainability and the inclusion of more diverse groups in society.

Hong Kong is not alone in facing these complex and interconnected challenges. Yet the factors behind its success as a high-income economy may become the very constraints that hinder its future prosperity and progress.

At the end of the last century, Hong Kong deindustrialised and built a service-based economy reliant on finance, tourism, trade logistics and professional services. Free-market fundamentalism made Hong Kong one of the world’s freest places to do business. It fostered a productive and complementary relationship with mainland China, which underwent rapid industrialisation as it integrated with the global economy.

03:29

Henry Tang recalls how Hong Kong entrepreneurs became the first investors in an economic reform that changed China

Henry Tang recalls how Hong Kong entrepreneurs became the first investors in an economic reform that changed China
Yet the mainland is now also going through a process of deindustrialisation, driven largely by the government’s efforts to transition the economy from an export-driven model to one that is more focused on domestic consumption and innovation. This process is likely to have a structural impact on Hong Kong, reducing demand for some of its external-oriented intermediary services.
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