B6 N THE NEW YORK TIMES, MONDAY, NOVEMBER 9, 2020
INTERNATIONAL
lations, could potentially refash-
ion its business environment, eco-
nomic prospects and even its
place in the world.
A smooth transition is by no
means assured. The most promi-
nent symbol of both the potential
benefits and dangers is the sus-
pended listing of Ant Group, the
Chinese fintech giant, which had
been set this week to list simulta-
neously in Hong Kong and Shang-
hai in what would have been the
world’s largest initial public offer-
ing.
It was expected to highlight
how an ever-wealthier China
could boost Hong Kong’s finance
industry in its competition with
New York and London for premier
deals.
Then Shanghai regulators post-
poned the offering just days be-
fore its intended debut. It showed
the risks Hong Kong faces by be-
coming too dependent on often er-
ratic and politically motivated
Chinese economic policy, and the
possible damage to the city’s own
financial sector from Beijing’s in-
terference with its political and le-
gal system.
That interference could end
Hong Kong’s long run as a free-
wheeling crossroads for bankers,
executives, journalists and
traders. It risks losing the interna-
tional stature and distinctiveness
that has elevated its iconic sky-
scrapers and equally lofty prop-
erty prices. Those pressures could
further depress an economy al-
ready in tatters from pro-democ-
racy protests and the coronavirus.
However, Beijing’s supporters
— and a number of business peo-
ple, like Mr. Lee — believe deeper
integration with China will cure
what ails Hong Kong. Closer
bonds could open new doors for a
range of Hong Kong businesses to
better capitalize on China’s ex-
panding riches and talent, while
helping Hong Kong remain the go-
to place for Chinese companies to
tap global financial markets.
The two are already tightly tied
in everything from trade to tour-
ism to finance. Hong Kong compa-
nies have not always felt the bene-
fits, however. Though Hong Kong
is part of China, its companies
have been treated more like for-
eign than local firms.
Beijing has been bringing down
some barriers. Three years ago,
the government introduced the
Greater Bay Area initiative,
aimed at improving cooperation
between Hong Kong, nine cities in
China’s Guangdong Province and
the nearby gambling haven of Ma-
cau, a former Portuguese colony
that is now part of China. The pro-
gram hands Hong Kong compa-
nies and residents some helpful
perks for doing business in
Guangdong, such as personal in-
come tax exemptions and eased
regulations on legal services.
Beijing’s policies “add more
muscle” to the integration
process, said Catherine Tsang, a
partner at accounting firm Price-
waterhouseCoopers in Hong
Kong. With more regional busi-
ness, more investors and compa-
nies will seek tax advice and other
financial services, she added, and
“there will be more business op-
portunities for our company as
well.”
More than any specific policy,
though, the initiative prodded pro-
vincial officials to treat Hong
Kong businesspeople less like out-
siders.
“Everybody felt that they had to
work with Hong Kong, work with
companies from Hong Kong,” said
UMP’s Mr. Lee.
Hong Kong’s white-collar busi-
nesses in particular could benefit.
In areas like health care, educa-
tion and accounting, and legal and
other professional services, Hong
Kong companies retain an edge in
experience over their mainland
compatriots.
Dennis Lam, chairman of Hong
Kong-based C-Mer Eye Care, said
the Greater Bay region is his top
priority for expansion in China be-
cause of its eased regulations as
well as its ample demand for
health care. The company has
four eye hospitals in the area, two
in the works and plans for more.
Mixing Hong Kong’s expertise
with the ever-larger Chinese mar-
ket “could be a very happy sort of
scenario,” Mr. Lam said.“We still have a good role to
play,” he added. ”What we can of-
fer is high-end services. This is
what they want, what they need.”
Boosters of closer ties can point
to other deals. Hong Kong prop-
erty giant New World Group is de-
veloping a $1.3 billion complex
with shops, a hotel and office
tower in the city of Shenzhen,
across the border from Hong
Kong. In terms of floor space, half
of New World’s property under
development in China is in the
Guangdong part of the Greater
Bay Area.
Others appear to find the in-
ducements tempting. In a survey
of regional businesses released
earlier this year, more than half of
the respondents from Hong Kongsaid that they were planning to ex-
pand in the Greater Bay region.
Looser barriers could work
both ways, however. The presence
and role of Chinese companies in
the local economy could expand,
especially state-owned enter-
prises, while the number of main-
land citizens working and living in
Hong Kong will likely also rise.
That will put pressure on Hong
Kong people trying to compete.
Hong Kong investment bankers
are already losing their jobs to ri-
vals from China’s mainland, who
frequently have better language
and other skills to work with Chi-
nese clients. John Mullally, a Hong
Kong-based regional director at
recruitment firm Robert Walters,
thinks the process is accelerating.“We’re talking about firms that
are pragmatic,” Mr. Mullally add-
ed. “They are going to populate
their offices with people who are
best placed and best capable of
the business that is there, which is
increasingly China.”
And that may be cause for con-
cern. Some fear Beijing’s en-
croachment onto Hong Kong
threatens its independent judicia-
ry and free flow of information,
the core pillars of its economic
success, and could make it less at-
tractive to international banks, in-
vestors and corporations. Critics
of the national security law, de-
signed to eliminate perceived
threats to the government, be-
lieve it has already curtailed civil
liberties in Hong Kong.
Chen Zhiwu, director of the Asia
Global Institute at the University
of Hong Kong, believes the further
erosion of the city’s independent
administration and legal system
is inevitable with greater control
by Beijing, with the result that
“Hong Kong will be just one city of
many Chinese cities.” That will di-
lute both Hong Kong’s interna-
tional standing and edge over the
mainland economy, limiting the
expansion of its wealth, he said.
“When all this change is done,even though the level of profes-
sionalism in Hong Kong is so
great, that can only take the econ-
omy so far,” Mr. Chen added.
Hong Kong’s future as an eco-
nomic and business hub could de-
pend on how much Beijing re-
spects its rule of law and free flow
of information. Despite the gov-
ernment hard line on dissent,
some in the business world be-
lieve that Beijing will ultimately
uphold these distinctive at-
tributes in a way that lets business
continue as it has.
The national security law “will
bring back social stability without
changing Hong Kong as an open
and free society,” said Shan Wei-
jian, chief executive officer of
Hong Kong-based investment
management firm PAG. As a re-
sult, “Hong Kong as an interna-
tional financial hub will continue
to thrive and grow, and grow very
strongly,” he said.
In the end, Hong Kong’s connec-
tion to mainland China will bolster
its appeal, said Yu Pang-chun,
convener of a working group at
the Hong Kong General Chamber
of Commerce focused on the
Greater Bay Area.
Hong Kong will remain “the
bridge for people who want to go
into China internationally, and for
the Chinese company that wants
to go international,” he said.
“That’s been the beauty of Hong
Kong for the last few decades. I
don’t think it is going to change.”As China Casts Shadow, Some in Hong Kong See Upside
FROM FIRST BUSINESS PAGE
PHOTOGRAPHS BY LAM YIK FEI FOR THE NEW YORK TIMESA delayed I.P.O.
highlights the perils
of dependence.
Hong Kong’s central business
district last month. Felix Lee,
left, sees opportunity in
integration with China.Download now at:
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