How Hong Kong can boost the return of international investor confidence in China

Seen as a bellwether of Beijing’s policy direction, Hong Kong’s authorities must present the right optics, meaning no decisions that hurt international confidence
The city must also engage with multinational firms, tackle their worries and serve as the front line for China watchers keen to access a fairer, more balanced and complete picture

Brian Y. S. Wong

Published: 3:30am, 4 Jul 2023

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At a recent meeting with Microsoft co-founder Bill Gates, Chinese President Xi Jinping told his “old friend” his hopes lie with “the American people” as the stabilising force in the volatile Sino-American relationship.

Gates’ trip was among several high-profile visits to China in recent months by business leaders, including the CEOs of Tesla, JP Morgan and Starbucks.

As the Chinese economy struggles to recover from the pandemic, Beijing has indicated a clear desire for foreign direct investment and capital, not just from emerging markets in the Middle East and Southeast Asia, but also from long-standing trade and financial partners whose relations with China have frayed, namely the United States and European Union.

Reviving foreign investor confidence, as Premier Li Qiang’s trip to Europe aimed to do, is of paramount importance as China seeks to reboot its private sector, reduce youth unemployment and maintain a delicate balance between avoiding asset reinflation and meeting its modest 5 per cent economic growth target.

As the most globally connected of China’s two officially capitalist cities, Hong Kong has a key role to play. Many in the city have spent the past few years bickering over how it could be better assimilated into the mainland or fulfil its national security requirements.

In theory, Hong Kong remains well placed as a hub of information and knowledge exchange on China. Its common law jurisdiction and deep pool of professional, legal and financial talent make it vital for foreign firms seeking to re-enter China or anchor in the Greater Bay Area.

Yet merely trotting out these narratives and visions will not cut it. Without addressing the critical hurdles, Hong Kong’s embrace of Web3, environmental, social and corporate governance, and other important new directions does little to fix investors’ crisis of confidence on China’s recovery. There are three concrete steps Hong Kong must take to prove the worth of its separate economic and legal institutions.

First, the political establishment must tread very carefully on decisions that can damage international confidence in the city, from which the international community would infer Beijing’s policy direction.

Multinational corporations, top professional talent and leading financiers settle in Hong Kong not only because it is a part of the Chinese economic ecosystem, but because of its fundamental difference from the mainland in the areas of freedom of speech, access to information and social media connectivity, the rule of law, and cultural lifestyle and zeitgeist.

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For China, Hong Kong’s unique value proposition is that it remains distinctly plugged into both the Chinese and international financial, informational and talent circuits. This is why much of the talent relocating from Hong Kong have opted for places like Singapore and Seoul, instead of Shenzhen, Shanghai or Beijing.

Maintaining salubrious ties with leading tech companies, such as Google and Meta, is vital to the city’s reputation as a linchpin for companies seeking a foot through the door in China. Their exit, if forced by Hong Kong regulation and compounded by US public pressure, would hurt foreign businesses’ confidence in China by signalling the closing-up of its most open and international city.

Second, we must address the worries of multinational firms – hedge funds, banks, consultancies and law firms – concerning our city’s trajectory.

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With the increasing prominence of artificial intelligence, the official unavailability of ChatGPT in Hong Kong has raised red flags for companies dependent on open and unfettered access to large data sets in the US, Europe and the rest of Asia.

Again, it is the optics that count – while it remains possible to use ChatGPT in Hong Kong via alternative means, the message is that the city could be increasingly isolated from cutting-edge technology.

Counteracting this requires actively positioning the city as a bridge between China and the rest of Asia, if not the world, on information and data. We must commit to upholding rights to privacy, information and freedom of speech where feasible, pushing back against calls by a vocal minority of reactionary conservatives to eliminate any form of healthy, desirable disagreement in the public sphere.

Hong Kong’s only recipe for success is to be a truly international city

In an increasingly multipolar world, Hong Kong could be where businesses leaders and top investors from Southeast Asian, European and Gulf states meet their counterparts and mainland government representatives. Our academic institutions provide exceptional platforms for great minds to meet. The prerequisite is that our elite listen and respond to the worries of our international business friends.

Third, Hong Kong must do more to improve the world’s understanding of China. Beijing is cognisant of its soft power deficit – in 2021, Xi called upon senior officials to craft a “credible, lovable, and respectable” image for the country.

With its wealth of senior bankers, prominent academics and leading intellectuals, Hong Kong could offer China watchers a fairer, more balanced and complete picture than that available through most Chinese state-run or international media outlets.

The prerequisite is that honest analyses and commentaries on China’s economy – instrumental in informing businesses of potential gains and risks – remain widely available. One-sided, unreservedly positive “stories” would only be dismissed as propaganda and detract from Hong Kong’s appeal.

As a born-and-bred Hongkonger, I am proud to call this city home. As I embark upon my academic career as a philosopher examining geopolitical trends, there are few better places I can think of being than here. I hope we can each do our share to preserve what makes this city valuable – not just for Hongkongers, but for the rest of China too.

Brian Wong is an assistant professor in philosophy at the University of Hong Kong, and a Rhodes Scholar and adviser on strategy for the Oxford Global Society