HONG KONG-MAINLAND TOGETHER
The rise of Hong Kong's global competitiveness was in tandem with the reform and opening up of the mainland, whose ranking on the IMD World Competitiveness Yearbook climbed from 27 in 1997 to 25 in 2016 and jumped to 18 in 2017.
The remarkable improvement of the Chinese mainland in the ranking can be traced to its dedication to international trade, and "this continues to drive the economy and the improvement in government and business efficiency," said Bris of the IMD World Competitiveness Center.
Hong Kong is not alone in its competitiveness stamina, as it is partly a reflection of Chinese mainland's ascent in global competitiveness over the last two decades, said Wendy Liu, head of Nomura China equity research.
Under the "one country, two systems," Hong Kong is not only able to preserve the free market ecosystem but also deepen its economic integration with the mainland, particularly with the neighboring Guangdong Province, Xiao said.
"The complementary cities of Shenzhen as the mainland's top innovation center, Guangzhou as its major international and domestic trade hub, and Foshan and Dongguan as its key manufacturing bases, have helped Hong Kong deepen its financial markets for cross-border transactions, as demonstrated by the successful launch of a number of cross-border bridging services for trading of stocks and bonds in Hong Kong," Xiao said.
"Unlike our parents' generation who made profits by setting up plants on the mainland, young people in Hong Kong can tap the career development potential given by opportunities like the Belt and Road Initiative and the construction of Guangdong-Hong Kong-Macao Greater Bay Area," Ng said.
CHALLENGES, HOPES AHEAD
The HKSAR is not without its challenges to keep its global competitiveness, including innovation bottlenecks and high living costs.
"The challenge for Hong Kong is to evolve from one of the world's foremost financial hubs to become an innovative powerhouse," noted the WEF's Global Competitiveness Report 2016-2017.
Many say a top challenge facing Hong Kong is the lack of property supply. Hong Kong's low taxation, efficient governance, safe and clean environment and beautiful nature are appealing to talents and investors, but many have been held back by the high costs for housing and private education, said Liu.
Xiao believes that the main challenge for Hong Kong in the future is keeping its competitive institutions while relaxing a number of its physical and social bottlenecks and constraints in land, property and talents.
"Despite marked improvements, there are still areas to tackle in order to ease the business climate for local entrepreneurs in Hong Kong and achieve long-term sustainability of very good results, as there is room for improvement in the areas of registering property, trading across borders and resolving insolvency," said Koch-Saldarriaga of the World Bank.
However, Hong Kong will be able to maintain its global competitiveness since the main factors behind its success, including strong commitment of the central government to the "one country, two systems," deep and expanding mainland markets, and resilient market systems, have not changed, Xiao said.
"If Hong Kong entrepreneurs can fully tap the huge market and technology potential in the mainland, that will greatly help Hong Kong to keep its global competitiveness," Ng said.
