Where Hong Kong will be in the next 25 years

Editor's note: Decision Makers is a global platform for decision makers to share their insights on events shaping today's world. Alpha Lau is the director-general of Invest Hong Kong, the investment promotion agency of the Government of the Hong Kong Special Administrative Region. The article reflects the author's opinions and not necessarily the views of CGTN.

Hong Kong is a springboard for Chinese companies going overseas and a very main gateway for overseas companies coming into China. We are a very strong financial center, trade logistics hub and a free trade center, so the investment flows going through Hong Kong – whether actual companies setting up here to expand their business or actual funds going through Hong Kong for further investments into China and in Asia – have seen significant growth.

In the first four months of this year, over 220 firms invested more than HK$22 billion ($2.82 billion) in Hong Kong, an increase of 42 percent in investment over the same period last year. By the end of 2024, Hong Kong had 9,960 companies with parent companies located outside, a 10 percent year-on-year increase. We foresee that this trend will continue to grow.

During the unrest in 2019, we did see its influence on foreign investors' sentiments. For companies, when it comes to investment expansion, we need a longer-term view, certainty and stability to do business. The introduction of the National Security Law brought stability to the region.

Initially, people were concerned about the law because Hong Kong introduced it quite late. Every country or region has some sort of national security law and most of them were introduced decades ago. And when we first had it, it wasn't helped by the rhetoric at that time because of shifting geopolitical considerations. But in reality, because of the National Security Law, Hong Kong's general situation has become more stable. And all companies need stability for their investments to be further improved. For most companies, if you look at your investments in a certain region or to expand your business, you're looking at a longer-term consideration, like 10 years or longer. It is essential to have stability not only in the business environment, but also a lawful safeguard of the factors that made Hong Kong so competitive over the years so that they would stay.

The U.S. Department of State's Investment Climate Statements claimed that the imposition of the National Security Law in 2020 "introduced heightened uncertainty for foreign and local firms operating in Hong Kong." However, a recent survey by the American Chamber of Commerce in Hong Kong indicates that over 70 percent of the surveyed American companies in Hong Kong reported that the law did not negatively impact their operations.

Instead, many found that it contributed to stability, which was viewed positively for their investment decisions. Sixty percent of them intend to increase their investments in Hong Kong and other regions in China. So I feel the National Security Law has brought stability to Hong Kong and made the environment far more investable for a lot of companies.

Beside the stable environment, Hong Kong has many other advantages. It has a very good geographical location. We are right in the middle of Asia. We have got world-class infrastructure and transport to over 150 destinations by flight alone. That is the underlying fundamental benefit of Hong Kong's location.

Hong Kong is also the world's number three financial center, and Asia's number one, very important as a conduit for fund flows and free capital markets. Hong Kong has also been voted the world's freest economy and the fourth largest destination for foreign direct investment.

Our biggest strength is that we are a global financial center, which is very important as a conduit for fundraising. We've got a complete financial ecosystem, all the way from private sector venture capital companies to our stock exchange.

Hong Kong is also very unique because we are closely connected with the mainland, and a series of interconnection systems, such as the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, make capital and investment flows between China and the rest of the world more convenient. Under the "One Country, Two Systems" principle, Hong Kong plays the role of a springboard which allows Chinese companies from regions other than Hong Kong to further expand their business to the rest of the world. We have professional staffs familiar with the intentional way of doing things. Hong Kong law recognizes both English and Chinese as official languages. This means that both languages are used in government, legal proceedings, and other official communications.

Besides, we also help foreign companies get access to the opportunities in Asia, especially in China. We have a common law system that international companies are familiar with. Hong Kong is a very good financial center to park their money. As a regional headquarters it enables these foreign companies to react quickly and deploy their investments around the region.

Invest Hong Kong will keep promoting investment, serving not only the special administrative region and China but also the rest of the world. It will become more and more important as an economic and financial gateway between China and the rest of the world. And this is where we'll be going the next 25 years.

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