International and regional business leaders from more than 100 financial institutions ended a three-day summit in Hong Kong Thursday that was widely seen as a signal that the territory is back in business after recently lifting some of the world’s toughest COVID-19 restrictions.
Hosted by the city’s de facto central bank, the Hong Kong Monetary Authority, the gathering of more than 200 financial heavyweights was the largest the city has seen in almost three years.
Consistently ranked as the world's third-leading financial center behind New York and London, Hong Kong has taken a beating from social unrest, its self-imposed COVID-19 isolation and reputational damage due to a crackdown on dissent. Now, it is hoping to make a comeback.
"We were, we are, and we will remain one of the world's leading financial centers. And you can take that to the bank," Hong Kong Chief Executive John Lee told the Global Financial Leaders' Investment Summit this week.
Some U.S. lawmakers, among them Representatives Chris Smith, a senior member of the House Foreign Affairs Committee, Blaine Luetkemeyer, and Lance Gooden, asked executives of major banks to reconsider attending the conference, saying their presence would legitimize China's clampdown on the city.
Four top executives did not show up for the summit. Capital Group Co.’s Chief Executive Officer Timothy Armour cited health reasons. Blackstone Inc. President Jonathan Gray and Citigroup Inc. CEO Jane Fraser tested positive for COVID, and Barclays Plc. Chief Executive C.S. Venkatakrishnan canceled citing a scheduling conflict.
Most of the other participants, including the chairmen of Goldman Sachs, Morgan Stanley and UBS Group, came, with some expressing confidence in Hong Kong.
China passed the National Security Law in 2020 in response to 2019’s widespread, often disruptive and sometimes violent protests in Hong Kong against a bill aimed at extraditing economic criminals to the mainland. Since the law's passage, media outlets supportive of the protesters have shut down, and some of their staff, as well as protesters and others, have been arrested on charges of secession, subversion, terrorism or collusion with foreign forces.
The arrests have raised concerns the city is being controlled by Beijing, but Lee and the government have insisted that the One Country, Two Systems formula under which the former British colony is supposed to be governed since it returned to Chinese rule in 1997, is still adhered to.
Lee said in his speech that "the worst is behind us." He said Hong Kong has restored stability and touted the city's uniqueness: its proximity and seamless connection with the mainland "that affords Hong Kong advantages available to no other economy."
Lee also pointed to government policies aimed at boosting Hong Kong's competitiveness, including a plan to use fiscal reserves to steer economic development, a $3.8 billion fund to attract businesses by co-investing in them, and a plan to lure talent, including by giving visas to graduates from the world's top 100 universities.
On the comeback trail?
Experts say it must do more or risk being eclipsed by Singapore.
They say that first, the government should drop all COVID-19 restrictions, including the current 0+3 policy, which no longer requires hotel quarantine but still expects visitors to avoid restaurants for the first three days after arriving. If they test positive, they must be quarantined for seven days.
"When I talk to key financial markets, Singapore, the U.K., the U.S., they've already gotten rid of all these requirements. Hong Kong is sort of an outlier," said Sally Wong, chief executive officer of the Hong Kong Investment Funds Association.
"While we are claiming ourselves to be a super connector, connecting to China and to the rest of the world, we cannot live up to this reputation," she said.
A survey conducted in July by her association found 35% of its responding member fund management companies have moved some or all of their regional or global posts from Hong Kong to other offices, partly due to the COVID-19 policies.
China also needs to allow Hong Kong residents to enter the mainland without having to quarantine, analysts said.
"Hong Kong cannot come back independent from China; it's not possible. Its business comes from China," said Andy Xie, a Shanghai-based independent economist. "The real start is when China exits ‘zero-COVID,’ then we can talk about something else."
Although there are many cross-border setups aimed at enabling investors in mainland China to invest in overseas markets through Hong Kong, and vice versa, stringent requirements need to be eased to make these services a reality, Wong said.
"Right now, the key investments in the mainland are the stock market and property market; the choice of investments are very limited and domestically oriented. With the growth of the middle class, there's an increasing need to conduct diversified portfolios," Wong said. "Hong Kong is definitely a key gateway to tap this potential."
Despite the departure of about 1.5% of Hong Kong's population, 98.5% of its people are staying, and the city continues to see mainland Chinese people and young professionals from elsewhere moving to Hong Kong.
Watching TV news reports about the summit, Hong Kong hair stylist Fang Du said holding the conference is a good idea, but the worst might not be over for Hong Kong. The territory saw three consecutive quarters of negative growth this year, with the economy shrinking 4.5% in the third quarter. Like many residents, she's hoping Hong Kong's situation will improve soon.
"Everyone wants their country to do better. … I'm confident in Hong Kong's future," Du said.
Combining business with entertainment, the Hong Kong Sevens, a annual international rugby tournament, opened this Friday, the first time since COVID hit.
While encouraging the financial executives to enjoy the Sevens, Lee made a final push for the goal post with his message to them.
“Opportunity and timing, right here, right now in Hong Kong," Lee said. "This is the moment you have been waiting for. Go for it. Get in front, not behind.”