It remains an indubitable fact that a major segment of the millennial gentry unequivocally eye the opportunity of working in a developed liberal economy like Hong Kong, which provides a robust economic landscape conducive for conducting business and services. However, we witness a reverse trend being played out in the current global landscape with large human capital shifting their economic base out of the territory to other parts of the world, preferably the West and other liberal Asian countries like Singapore or Taiwan. The Special Administrative Region of Hong Kong strategically tucked in the Dragon’s underbelly currently braves the turning geo-political tides in East Asia.
An estimated 216000 Hong Kongers have obtained BNO(British National Overseas) passports from the British passport office in 2020 alone, intending to shift economic camp to the UK in light of the harrowing events of chinese interference in the region. Reports suggest that the UK granted five passports a minute to Hong Kongers in 2020 as China tightened its grip on the semi-autonomous region.
Hong Kong’s terrific performance on the economic front has put the nation, smaller than the size of Delhi, on the list of countries serving as poster boys for economic prosperity and capitalistic success. The nation’s growth trajectory can be traced through history, keeping the political discourse chosen by its leaders in centre focus.
Hong Kong, being a part of mainland China originally, was relinquished to the British empire on account of having lost the opium wars in the late 19th century. The British signed a 99-year lease for the territory with validity till 1997 post which an authorized handover brought Hong Kong under the “one country, two systems” principle, deeming it as a Special Administrative Region(SAR) having limited democracy. The system will last till 2047.
Since then, Hong Kong has witnessed an unparalleled acceleration on the economic periphery, boosting its GDP and raising the standards of living for its people. It has attained the status of a developed nation, credit to it being an attractive investment hotspot for high net worth individuals. The ease of doing business and tax concessions provided by the government have attracted major foreign players whose enterprises have created jobs in the service sector, contributing an estimated 90.3 per cent of the GDP. Its strategic location in the east allows easier penetration into the markets of Mainland China, serving as a crucial factor for multinational conglomerates. Globally, Hong Kong ranked second in wealth per adult after Switzerland in mid-2019 and 10th in the number of people with more than $50 million in assets.
Hong Kong’s dilemma can be understood in the context of notorious political interventions by China, which is the primary reason for migration of human capital towards the West. Hong Kong’s rich are moving out of the territory to secure asset safety somewhere else. Time and again, China has tried to exert its political influence over the semi-autonomous region, sending shivers down the spines of pro-democracy supporters. It triggered a series of protests in the region back in 2019 with repeal of the controversial extradition bill as their primary demand. The passing of this extradition bill in June 2020 proved to be the last straw for democracy valuing citizens who took to the streets of Hong Kong and are now seeking citizenship in countries like the UK, USA, Canada, and Singapore. Hong Kong is witnessing the migration of skilled human capital like entrepreneurs and service providers to other countries due to fears of state control over economic institutions and a curb on free-market forces with civil and political liberties taking major hits as well. Traders and business persons fear that the corruption drives taken out by the state government would hamper their ability and freedom to carry out businesses on their own accord, free from state influence. China’s increasing expansionist policies under Jing Ping’s regime have threatened and violated international diplomatic agreements triggering an unavoidable trade war with the USA, which has had major ramifications on the economies of both countries.
Hong Kong’s standing as a stable international financial centre acts as a gateway for global capital flow into the Dragon economy. The SAR serves as a springboard for China’s global economic expansion, which heavily rests on Hong Kong’s currency, debt and equity markets to channel foreign direct investment. International conglomerates use the region as a backdoor entry to expand into mainland China. An array of state and privately owned Chinese companies are listed on the Hong Kong stock exchange, which enables them to generate significantly higher amounts of capital through IPO’s, in juxtaposition to listings on the Shanghai or the Shenzhen stock markets. Further political deterioration may lead to US Senators amending the 1992 Hong Kong Policy Act and stop treating it as a separate customs area from the mainland. The diplomatic move may have a damaging effect on Chinese companies, which rely heavily on Hong Kong’s special status under United States law in terms of tariffs, free exchangeability between United States dollar and Hong Kong dollar, intellectual property, and acquisition of technologies among others. The current political narrative has destabilized Hong Kong’s credibility as the world’s leading financial and legal centre, caused major capital flight, a reverse flow of human capital and collapsed the region’s booming property and stock markets, in addition to being detrimental to China’s own economy. The ‘new era’ of Chinese geopolitical ambition and subsequent global domination requires swift control and influence over the Western-Pacific, popularly referred to as China’s Backyard before foraging into the West and beyond. Control over its backyard gives China the essential regional primacy required for out-flanking the US alliance arrangement and undermining the QUAD nexus in the Western-Pacific.
The BNO passport offer by British Foreign Secretary Dominic Raab, as some foreign policy analysts, may say, mischievously bends around the 1984 Sino-British Joint Declaration regarding the resumption of Chinese sovereignty over Hong Kong.
The only stakeholders that stand to profit from this are countries like the UK and Singapore, receiving highly skilled, advanced human capital and service providers at their end whose influx would further thrust their economies in the right direction and create a more heterogeneous society conducive for strengthening democracy and ensuring equitable representation.
By Aaryan Gadhok
aaryangadhok@gmail.com