Hong Kong dollar peg: could the financial hub’s stable exchange rate keep Shenzhen and Macau at bay?
- Analysts say Hong Kong’s importance to the mainland will continue because of its stable exchange rate under the US dollar peg, despite anti-government protests
- Macau and Shenzhen unlikely to replace the city due to Beijing’s reluctance to end restrictions on domestic money exchanges and fully open its capital account
This is the final instalment of a three-part series looking at the outlook for Hong Kong’s dollar peg system under the city’s current political turmoil. You can read the first story in the series here and the second story in the series here.
China will continue to value the stable US dollar peg system that underpins Hong Kong’s status as an international financial hub, despite six months of anti-government protests that have been strongly criticised by Beijing, analysts said.
The Chinese leadership has widely condemned the civil unrest in Hong Kong, pledging to strengthen supervision of the city’s affairs through legal means and new enforcement mechanisms.
That has contrasted sharply with language used to describe Macau, which has been praised for its adherence to the Basic Law and the principles of the “one country, two systems” principle.
Both Macau and Shenzhen have recently been endorsed by Communist Party officials in an apparent effort to reward them for having avoided protests, and signalling an official policy shift away from Hong Kong for driving national economic development.
