Hong Kong celebrates 10 years under PRC rule

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Hong Kong celebrated its tenth anniversary since returning to mainland China on Sunday. As with any arbitrary anniversary, this presents a moment to look back at that was, and what has happened since. Hong Kong has come a long way since those uncertain days in 1997. SARS and the Asian financial crisis hammered the city already weary of mainland rule, the financial crisis beginning only a day after the hand-over, SARS taking upwards of 300 Hong Kong residents and quite nearly its tourist industry as well.

Hong Kong has bounced back, surpassing all expectations that many observers had ten years ago. Its stock market surpassed New York as the second most popular place, after London, to float new stock listings, with the biggest new listing coming from the mainland. Hong Kong’s close ties to the booming economy of the mainland have given its own economy renewed power.

Hong Kong has experienced strong and broad-based economic growth in recent years, with real GDP expanding by 7.5 percent in 2005, 6.9 percent in 2006 and 5.6 percent year-on-year in the first quarter of 2007 according to the Hong Kong Trade Development Council. Unemployment rates are falling and tourism is rising – a total of 25.3 million visitors (about 3.7 times the size of the local population) came to Hong Kong in 2006; that represents an 8.1 percent increase from the previous year.

The International Herald Tribune reports:

The Hong Kong economy increasingly resembles that of New York City, with an enormous reliance on financial services and tourism. While Singapore remains dominant in energy trading and Japan has the deepest bond market in Asia, Hong Kong has become increasingly important as a center of regional equities trading.

Fidelity even decided in May to move its Japanese equities trading desk to Hong Kong from Tokyo, so as to combine operations with its equities trading desks for other Asian markets, already located in Hong Kong.

“Its proximity to China has given it a huge advantage over other people who thought that they would be in that space – I mean, I guess, the most obvious is Singapore,” said Michael Smith, who recently stepped down as chief executive of Asian operations

Until very recently, Hong Kong retained its role as China’s biggest container port, and vied with Singapore for the title of the world’s busiest. But Shanghai passed Hong Kong in the first quarter of this year in container traffic, and Hong Kong’s neighbor Shenzhen is poised to pass it in the coming months, by offering newer ports with lower-cost labor to handle the flood of goods pouring out of southeast China’s factories.

As with New York, Hong Kong is finding that a base of finance and tourism but diminished manufacturing can exacerbate income inequality, with high-paying jobs for bankers and other professionals, many of whom are Western expatriates, and a lot of low-paying jobs in restaurants, hotels and other services.

It seems for Hong Kong, Sundays festivities weren’t only about celebrating the past ten years, but also about looking towards a bright economic future. Concerns about the future of the city’s democracy seem to be, for the moment, a distant worry.

China Expat has a special July issue about Hong Kong’s journey back to the mainland. Additionally, China Briefing publisher Chris Devonshire-Ellis’ comments and feelings concerning the handover evening ten years ago can be found on China Expat’s Daily Tea Leaves.