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1 results

  • 3 - The Making of China’s Offshore Financial Center

  • from Part I - Capital
  • Ho-fung Hung, The Johns Hopkins University, Maryland
  • Book:
    City on the Edge
    Published online:
    19 April 2022
    Print publication:
    19 May 2022, pp 45-71

  • Summary

    Chapter Three addresses Hong Kong’s economic function for China after 1997. Beijing’s challenge has been to perpetuate Hong Kong’s role as China’s offshore financial and trading center after the sovereignty handover. After 1997, the US-HK Policy Act allowed the US and the international community to continue treating Hong Kong as an independent trading entity separate from mainland China. Hong Kong maintained its separate membership in international organizations like the WTO, even after China joined those organizations. This continuous special status, conditional upon Hong Kong’s autonomy from Beijing under the One Country, Two Systems, made Hong Kong a conduit and stepping stone for Chinese capital and the elite who sought access to global capital or relocation to other parts of the world. It is also a key to Beijing’s plan to internationalize the Chinese currency Renminbi (RMB) without making RMB fully convertible in mainland China. Hong Kong’s unique offshore financial role for China led to increasing Chinese capital domination in Hong Kong.