Editor: Asia Pacific Elite Wealth Management Institute 


Why Hong Kong will Continue To Prosper In The Next 20 Years?

Due to the social movements and the changes in the political and economic environment in recent years, many people may think that the future of Hong Kong has been cast a shadow. However, this paper will analyze why Hong Kong will continue to prosper in the next two decades, and thus to provide the thinking and discussion on the future of Hong Kong. This paper will try to explore the internal advantages and external opportunities of Hong Kong by SWOT, and then analyze the huge potential advantages of Hong Kong from macro perspective of PEST analysis.


The greatest advantage of Hong Kong is its location advantage, which can be divided into three levels: 1) Geographical Location, as we often say, Hong Kong is an important gateway to Southeast China, facing Southeast Asian countries; 2) Transportation Location: Hong Kong is the transportation hub of the world, connecting the East and the West; and 3) the Cultural, Social and Economic Location: Hong Kong is a place of integration of China and the west, which gathers a large number of talents from all over the world. At the same time, Hong Kong has a market base of more than 7 million population, and its average income is close to that of developed countries. All of the above constitute the geographical advantages of Hong Kong. Hong Kong’s natural geographical environment is also very good. The Great Bay area of Hong Kong, Zhuhai and Macao has a huge hinterland and high connectivity, which makes a large potential sales market and helps enterprises to develop business to the Mainland.

Hong Kong’s rule of law advantage can refer to the ranking of the World Justice Project. In the March 2020 report, Hong Kong’s rule of law ranks at 16th. The overall rule of law level is among the best in the world, and it also ranks third in Asia. Even if some people think that the Hong Kong National Security Law may more or less impact the rule of law in Hong Kong, its long-term advantages are still beyond doubt. The administrative efficiency of Hong Kong has always been praised. After the China government strengthens its rule over Hong Kong through the National Security Law, the administrative efficiency will only be further improved. While strengthening its control over Hong Kong, the administrative efficiency will certainly be improved. It will be a big bonus for all sectors to set up companies.


At the same time, Hong Kong is also facing huge external opportunities which coincides with a new wave of technology cycles. According to the 2020 Global Innovation Index, the Guangzhou-Shenzhen-Hong Kong science and technology cluster, which is composed of the innovation and technology industries of Hong Kong, Shenzhen and Guangzhou, is the second largest science and technology cluster in the world. It ranking of the Global Innovation Index is the 11th in the world, and the ranking continues to rise. In addition, more and more enterprises are participating in the nurturing and accelerating programs. Universities, Cyberport and Hong Kong Science Park are launching various new programs to promote related start-ups, and the emergence of a series of eye-catching fund-raising activities for start-ups in the market, especially the rise of “unicorn business”. It is generally expected that Hong Kong’s science and technology industry will soon reach a turning point, with a greatly accelerated growth rate.

As the world moves into regionalization, Hong Kong’s regional advantages are expected to be enhanced. With the signing of RCEP, Hong Kong, as a major port and an important hub for Southeast Asian countries, is expected to benefit greatly from the huge economic advantages brought by RCEP and enjoy the vast market and 92% low tariff preference for products; Another obvious case of regionalization is the trade war between the United States and China. The development of the trade war between the United States and China has hindered many Chinese enterprises from listing in the United States. The internationalization of Hong Kong has naturally become the first choice for major enterprises; The last opportunity under regionalization is the signing of the belt and road initiative. As the starting point for Hong Kong to enter the belt and road initiative, countries can use Hong Kong to enter China, and then from China to Central Asia and Europe.

We can see that Hong Kong’s external opportunities, combined with its many superior inherent conditions, constitute an important foundation for Hong Kong’s sustained prosperity in the next 20 years. Next, we can take a closer look at what impact Hong Kong will be affected under the PSTEEP model.

POLITICS:  in the post-globalization era, Hong Kong is located at the hub of Asia, with advantageous geographical location, attracting multinational companies to settle in

First of all, in terms of politics, the trend of regionalization will continue to develop in the future. The rise of China has destroyed the globalization development led by the United States in the past, and formed the new three countries trend of China, the United States and Europe. In this case, the geographical advantages of each region will become more important. Hong Kong, for example, is located in the middle of East Asia. To the northeast, it can connect Japan and South Korea, and to the southeast, it can connect Southeast Asia and Singapore. It is the best choice for integrating the economy and trade of Asia as a whole. At the same time, Hong Kong’s high degree of internationalization and smooth communication between Chinese and English have advantages for many multinational enterprises.


TECHNOLOGY:  as a technological innovation settlement, the Hong Kong-Shanghai-Shenzhen triangle could become the next Silicon Valley

In the aspect of science and technology, Hong Kong’s highly internationalized enterprise environment will attract international innovation and technology enterprises to enter the Chinese market, and on the contrary, it can help Chinese innovation and technology enterprises enter the global market. As an important town for scientific and technological exchanges between China and the west, together with the clustering effect of scientific research in Hong Kong, Pearl River Delta and Macao, and with outstanding talents from many well-known universities nearby, it is expected to effectively replicate the Western Silicon Valley model.


SOCIETY and POPULATION:  supply and reserve of high quality talents, and continuously attract international high quality talents

As for the social sector, in addition to the vast market of 70 million, many of the world’s top universities provide excellent talent reserves to enable Hong Kong enterprises to have strong competitiveness. At the same time, the data show that Hong Kong’s residents have been growing since 2015, reflecting Hong Kong’s strong attraction to the international population. For Hong Kong, the attractiveness of international population is a very important human capital, especially in the modern era of fewer children. Through immigration, we can effectively optimize the domestic population pyramid, enhance the labor force and consumption power, and further enhance the competitiveness of the whole country.


ECONOMY:  capital marketization, combined with high administrative efficiency, provides enterprise competitiveness and sufficient capital

Let’s talk about the economy. The capital marketization of China’s private enterprises is undoubtedly a major boost to Hong Kong’s economy. With the capital marketization of many enterprises, internationalized Hong Kong is the best choice for them to go public. It can not only make their asset distribution more globalized, but also better optimize the capital structure of their own enterprises. In addition, Hong Kong has a simple tax rate and fast administrative efficiency. Listing in Hong Kong is undoubtedly highly attractive to many Chinese and even global enterprises.


ENVIRONMENT:  driven by the Hong Kong Monetary Authority, we will continue to promote green finance and attach importance to sustainable development

Finally, in the aspect of environment, Hong Kong also takes the lead in promoting green sustainable finance and responsible investment. In recent years, natural disasters caused by global warming and climate change have occurred frequently, resulting in numerous casualties and huge economic losses, which are becoming more and more serious. These natural disasters have led to the rising risk of bank business interruption, the devaluation of property collateral, the soaring insurance costs, and the growing threat to the banking system. Therefore, it is urgent for regulators and the industry to take more active measures to deal with climate risk. The HKMA has also taken the lead in issuing guidelines to Hong Kong banks to promote “green and Sustainable Banking” in three stages.


As for ESG, the international investment community’s concept of green finance and “environmental, social and corporate governance (ESG)” has changed greatly in recent years. More and more evidence shows that green finance and ESG investment will not sacrifice returns. On the contrary, some of them can improve the sustainability of long-term investment, and even achieve more reasonable risk adjusted returns. The HKMA’s investment in the management of the exchange fund also focuses on long-term returns, and regards green finance and ESG investment as important drivers to enhance long-term value.


It can be seen from the above that Hong Kong attaches great importance to green economy and ESG investment. It is more hopeful that Hong Kong will benefit from investors’ increasing attention to the environment and be more in line with international standards to become the first green financial center in Asia.



From the above analysis, it is not difficult to see that Hong Kong still has many irreplaceable advantages in the future, and these advantages will only be stronger and will not disappear in the future. Is it a change of people’s view on the bleak future of Hong Kong? Maybe now is the best time to buy Hong Kong on the cheap. After all, the future of Hong Kong will not fade, but will become the oriental pearl shining brightly after the washing of time!

商學院, 香港恒生大學
香港 新界 沙田 小瀝源 行善里
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Chinese Family Succession Research Centre
School of Business, The Hang Seng University of Hong Kong
Hang Shin Link, Siu Lek Yuen, Shatin, N.T., Hong Kong
Email: cfsrc@hsu.edu.hk       Tel: (852) 3963 5588
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