Hong Kong critical to China but uncertainty reigns
https://www.dw.com/en/hong-kong-crit...gns/a-50041265
China doesn't need the former Crown colony quite as much as it did back in 1997 when it switched from British rule. But the Special Administrative Region remains a valuable conduit for Beijing.
In the past four decades, China has emerged as the world's second-biggest economy and an integral part of the global financial system. That rise was facilitated by Hong Kong. With economic reform still lagging on the mainland, having ready access to Hong Kong's freewheeling brand of capitalism is vital for China. China’s interests are best served by the 'one country, two systems' agreement struck with Britain in 1997, which guarantees its legislative and legal systems as well as its own currency and capitalist economy until 2047.
"Hong Kong’s stock exchange is the primary capital market for mainland Chinese companies’ IPOs; the city still boasts the most sophisticated judiciary, business arbitration and financial expertise necessary for the Belt and Road Initiative; and Hong Kong’s separate customs status allows the acquisition of sensitive strategic technology," Lee wrote in The Washington Post.
China deeply invested in Hong Kong. A look at the data shows just how devastating it would be for China, both economically and geopolitically, if it sent in military forces or activated the garrison of Chinese troops in Hong Kong itself. Chinese direct investment in Hong Kong totals $620 billion (€556 billion) — 70% more than Hong Kong's overall gross domestic product (GDP). Of the 10 biggest public listings (IPOs) since 1986, nine were Chinese.
The US-China trade spat and the blacklisting of telecoms giant Huawei have put Beijing in a bind. Chinese companies have been ordered to become less dependent on foreign money and technology, which means more of a focus on Hong Kong.
Half of all companies on the Hong Kong stock exchange are mainland companies, including 50 of the largest state-owned enterprises
Every year for 25 years, the Heritage Foundation has named Hong Kong as the world's freest economy. By comparison, China ranks a lowly 100th. Foreign companies need Hong Kong too. The territory is a base for over 1,500 multinational companies who use it as an easy way into the China market — 60% of foreign investment comes through Hong Kong.