This week China celebrates 20 years since regaining control of Hong Kong from the British. I recall the preparations, concerns and celebrations clearly as I experienced my first time in the Far East back in 1997. What many forget is that in only another 30 years, Hong Kong reverts totally to Chinese rule, laws and citizenship. Here are some more recent thoughts on the past and what is to come.
Hong Kong - the past
With tanks lined up on the Boarder with Hong Kong, many from the community had already left to relocate in Vancouver, London and New York. In fact anywhere where the PRC could not control their wealth and activities. Within months of the handover Asia was plunged into a financial crisis which hit new-China hard as over levered State Owned companies (GITIC), cities and provinces raced to restructure unsustainable balance sheets. Hong Kong was therefore seen by China as the Golden Goose and little was done to interfere in its operations. Business as usual was the order of the day.
Hong Kong - the present
Unimaginable growth in China to become the world's second superpower means that it now wishes to exert greater direct influence on this important out-post. Appointment this month of Carrie Lam as Chief Executive of Hong Kong and the subsequent changes in the way Hong Kong's financial system is allowed to operate has certainly changed the outlook. While Shanghai now challenges Hong Kong as China's financial centre, Hong Kong still offers vital access and integration to international markets. As President Xi visits Hong Kong to mark the date of the handover, it is clear that one system two countries will soon be a thing of the past.
Hong Kong - the future
Today, Hong Kong children up to the age of 15 will find they will be at their maximum earning potential at the same time as Hong Kong becomes one with China again. One can only hypothesis as to what part China's 1.4bn (?) population will play on the world's political and economic stage. Maybe China will be the "go-to" economic centre in the world and Hong Kong citizens feel lucky to get direct access to it? Alternatively will these children of today be classed as second class citizens - will removal of Hong Kong's legislation result in dramatic changes in economic value distribution - will Hong Kong still hold its place as the Far East's financial centre? These topics and others will probably form part of the education curriculum for the children growing up?
So what does this mean today?
While 2047 seems a long way off, we expect to see acceleration of Chinese controls over activities in Hong Kong. Little perception of change will be felt over the next five years but in 10 years time the changes put in place today will have real traction and cause those with wealth in China and Hong Kong to be considering how they wish to undertake personal and business asset planning. So if you have not already considered your position, maybe now is the time to start planning?