COMMENT›INSIGHT & OPINION Despite Occupy protests, Hong Kongs financial centre status is assured David Meyer says London and New York have survived much worse than the Occupy protests PUBLISHED : Monday, 22 December, 2014, 2:27pm UPDATED : Monday, 22 December, 2014, 8:29pm David Meyer VIEWEDSHAREDCOMMENTED Trouble in paradise: Chinese ‘astronaut’ dads caught in St Kitts passport tangle Public must unite behind police force, which is still Asias finest Hong Kong anti-corruption agency finally gets its tigers Anthony Hedley was a true hero of community health A Jew, Chinese Person, and a Cameraman Walk Into a Comedy Club… We recommend VIDEOS 09 Dec 2014 Western vs Hong Kong style: how butchers prepare meat VIDEOS 17 Dec 2014 Chinas dancing damas twirl across squares throughout the country NEWS 22 Dec 2014 Jackie Chans son Jaycee facing jail after being charged with drug… NEWS 22 Dec 2014 Ling Jihua, former aide to Chinas ex-president Hu Jintao, placed… NEWS 23 Dec 2014 CY Leung promises affordable homes for the middle class after cooling… NEWS 22 Dec 2014 Big names make pleas for leniency as Hui and Thomas Kwok face… COMMENT 23 Dec 2014 Rafael Hui graft case shows need for vigilance COMMENT 23 Dec 2014 Pakistan unity is key to defeating murderous Taliban BUSINESS 23 Dec 2014 Causes and consequences of more time and money COMMENT 22 Dec 2014 China must fight corruption, one city at a time COMMENT 23 Dec 2014 In Lang Lang, talent met with hard work LIFESTYLE 23 Dec 2014 Divorced dad struggles to set boundaries with ex-wife for parenting LIFESTYLE 21 Dec 2014 Meet the French Chinese star of hit comedy about weddings, Frédéric… LIFESTYLE 22 Dec 2014 Yuen Long offers secret trails, hidden pools and beautiful scenery BUSINESS 11 Dec 2014 Malaysia emerges as Southeast Asia’s weak spot PROMOTED STORY NIKKEI ASIAN REVIEW 11 Dec 2014 Australia stares into uncertainty PROMOTED STORY EXPAT LIVING SG 10 Oct 2014 Ultimate pampering session for the ladies: unlimited spa treatments… Recommended by Promotions SCMP Subscribers only - Invitation to THE PHANTOM OF THE OPERA musical and backstage tour Your FREE copy of Home Essentials 2015 Hong Kongs bad publicity from the protests pales next to what London and New York have experienced. Photo: Bloomberg Many commentators have argued that the Occupy movement has damaged Hong Kongs status as Asias leading financial centre. The protests highlight the continued control that China exerts over the electoral process in Hong Kong, even though the steps in this process are set out in the Basic Law. Some see this control as detrimental to the freedom that financiers and their firms require to operate in a leading global centre. The presumed negative consequences of the protests range from bad publicity that encourages global financial firms to seek an alternative operational base, to intensified concern about Hong Kongs future as a financial centre, to fears that Beijing leaders will penalise the city and shift support to an alternative centre such as Shanghai. The likelihood of these negative consequences coming to pass is negligible. To understand why the protests have little probability of undermining Hong Kong as Asias global financial centre, we need to examine the foundation of the citys status. It is the home for Asias greatest agglomeration of sophisticated decision-makers who control the exchange of capital within the region and between it and the global economy. This agglomeration was set in the late 19th century when the top trading and financial firms from outside Asia chose Hong Kong for their operational base for Asia. Major Chinese firms from around the region joined them to create a social network of capital through which knowledge and expertise were shared about the Asian economy. Non-Chinese businesses from elsewhere in Asia likewise joined the agglomeration. This great cluster of sophisticated decision-makers has never been undermined. Any firm that would leave it for another site in Asia would erode the firms participation in exchanges of capital. In any case, there are no viable alternatives to Hong Kong. Singapore is the leading financial centre for Southeast Asia, but few financial firms operate their Asian business from that city. Even more problematic, the growing heft of China in financial markets would never be transmitted to Singapore. China always will favour one of its cities as its window to global capital. Tokyo is a financial centre for Japan, but foreign firms only house their Japanese business in that city. It has never been a meeting place of the foreign and Chinese social networks of capital. Which brings us to Shanghai. Since the early 19th century, that city has been the top financial centre for China because its traders and financiers developed the most sophisticated networks throughout the nations regions. Foreign financial firms have rarely housed their Asian headquarters in Shanghai; instead, they use it for their China base. The overseas Chinese firms likewise use Shanghai for their China business, but base their Asian management in Hong Kong. Since the return of Hong Kong to China in 1997, global financial firms have continued to expand their presence in the city. Virtually all the worlds leading commercial and investment banks house their Asian management in Hong Kong while basing their Southeast Asia managers in Singapore. Likewise, global private equity and hedge funds and fund management companies operate large offices in Hong Kong. The job mobility of global financiers takes them among London, New York and Hong Kong, solidifying the network relations of the cities as the tripartite leaders of global financial decision-making. The Hong Kong protests did engender negative publicity but London, the worlds leading financial centre, received decades of it as the Irish Republican Army set off bombs in the city. New York City, the second most important global centre, episodically receives severe negative publicity ranging from race riots in the 1960s, to its near bankruptcy during the 1970s, to recent accusations of police brutality in killing suspects. Hong Kongs bad publicity from the protests pales next to what London and New York have experienced; yet, their financial status has never been disrupted. Even though some Beijing leaders have expressed annoyance at the protesters, over the past several decades, Chinese officials have never deviated from stating support for Hong Kong as Chinas window to global capital. It is ludicrous to argue that they would undermine the city which symbolises the countrys re-engagement with the global economy. Beijing authorities carefully crafted a mechanism, the Hong Kong Special Administrative Region, to let the world know that the city remained open to global capital after 1997. Hong Kongs future as Asias global financial centre is secure. David Meyer is senior lecturer in management at the Olin Business School, Washington University in St Louis, and professor emeritus of sociology at Brown University. He wrote the book, Hong Kong as a Global Metropolis, and continues to publish research on the city
Posted on: Thu, 25 Dec 2014 10:44:01 +0000
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