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Wednesday, Oct 28, 2020

How China's Economic Boom Eclipsed Hong Kong

How China's Economic Boom Eclipsed Hong Kong

Back in 1993, Hong Kong's economy was more than a quarter the size of China's. It had a GDP of $120 billion, more than many industrialized nations, while Chinese GDP was approximately $445 billion, according to the World Bank.

Fast forward to 2018 and the emergence of megacities such as Chongqing, Shanghai, Shenzhen, Beijing, Chengdu and Harbin has powered the country's GDP to $13.6 trillion. While Hong Kong remains a key Asian economic powerhouse, its GDP now stands at just 2.7% of China's - $364 billion.

Currently, the pace of Chinese economic growth is slackening which has caused Hong Kong's economy to stutter and that has been exacerbated by the protests which have paralyzed the city. Retail sales and tourism numbers have declined while there are fears of a recession occurring in the next quarter.

Despite the economic eclipse, a move to deploy the PLA on the streets of Hong Kong would be risky for China. Many observers believe such a crackdown would cause the city's stock market and housing sector to crash.

That would in turn prompt an exodus, sending economic aftershocks rippling through the mainland at a time when the Chinese economy is vulnerable due to the ongoing trade war with the United States.

A crackdown would also result in an immense diplomatic fallout, given Hong Kong's large expatriate population and status as a global financial hub. As the military buildup continues, the stakes are unimaginably high.


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