Professor Thomas Chan Man-hung, director of the One Belt One Road Institute of the Chu Hai College, is on the show this week.
Professor Chan says one of the key ways for Hong Kong to stay competitive in the region is by playing a role that complements the nation’s economic development in the Belt and Road initiative. He says maybe now is the time to get to know the new G8 of emerging economies and move away from the G7.
Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Professor Thomas Chan Man-hung.
E. Chan: Good evening. I'm Eugene Chan with Straight Talk. Our guest tonight is Professor Thomas Chan Man-hung. He is the director of the One Belt One Road Research Centre at Chu Hai College. He is an academic researcher, and has undertaken a range of research projects for the Hong Kong SAR government on various topics, including Hong Kong's role in the One Belt, One Road strategy, which was mentioned in President Xi Jinping recent speech in Hong Kong. We have invited Professor Chan tonight to tell us what his research says where Hong Kong will be in 10 years’ time. Welcome, Thomas.
Thomas, before we go on, and ask you what Hong Kong will be in 10 years? Maybe just a very quick question. In your view, how has Hong Kong fared the last 25 years? Has it been successful?
Prof. Chan: I think that Hong Kong has not done much in the last 25 years, Hong Kong has not adjusted to its new role as part of China under the “one country, two systems” regime. And that means even though there was some growth in Hong Kong's economy, but it has a lot to adjust itself to new challenges, and therefore, the achievement was much less than we expected.
E. Chan: You know, people from Hong Kong, or the rest of the world always say Hong Kong is a very successful city. Because Hong Kong people are very resilient, very hardworking, the mindset is very fast. But when you said Hong Kong has not been successful, it’s quite contrary to what people believe. What backs you up in that statement.
Prof. Chan: Well, in the past, before the handover, Hong Kong depended very much on a very favorable environment that's set up by the British and American. And Hong Kong has one advantage, the first mover advantage in the 1950s, where there was a transplantation of Chinese (mainland) industry to Hong Kong. So at that time, Hong Kong was competing with Japan. But in the process, you can see that Hong Kong could not compete with Japan and it started to compete with Korea, Taiwan, and recently I think that Hong Kong is also lagging behind them. And that means that Hong Kong still has some growth, but the growth is not impressive compared with the neighboring economies.
E. Chan: But if you look at the international financial center index, we have maintained number three in the world – that must be an achievement.
Prof. Chan: It depends very much on the growth of our nation. In Hong Kong, we have the international financial center, the money used in these financial centers come mainly from the Chinese mainland, not so much internationally. So it's because of the growth of our country that Hong Kong can become a major financial center in the world. Without our nation's feather, Hong Kong may not have such a kind of a position.
E. Chan: Right. Just now, you mentioned Hong Kong hasn't adopted the role very well, under the “one country, two systems”, why do you say that?
Prof. Chan: Well, Hong Kong had not integrated effectively with the economy of our nation. This doesn't mean that Hong Kong would be taken over by the Chinese mainland but Hong Kong had to adjust its competitive advantage with areas next to us, like Shenzhen, Guangzhou. So that we can have some sort of synergy to achieve better results for both Hong Kong and Pearl River Delta region.
E. Chan: You know, Hong Kong has always, as I said earlier, Hong Kong people always feel that we're doing well, maybe is this… do you think is this the complacency of Hong Kong people thinking that we're doing very well, do you think this is the major factor why we haven't progressed as much as we should have been?
Prof. Chan: That's one factor. The other factor is that Hong Kong is not aware of the development around here, for example, Singapore used to be very much behind Hong Kong, being a smaller economy. But now it’s both… in terms of both our GDP and… forget the GDP, it has overtaken Hong Kong already. So compared with Singapore, we are not doing very well. And we are not sure about the success of Singapore, because we are not looking at Singapore squarely.
E. Chan: Since you mentioned Singapore. In the last few shows, we often talk about Singapore. I mean, it is our neighboring city where we have a lot of friends and relatives who live in Singapore. We have been on good terms, but it seems like we are losing a lot of talent recently, especially in the financial sector, to Singapore. Do you think that trend will continue?
Since you mentioned Singapore.
Prof. Chan: There's two factors that built up the economic growth of Singapore. One is that they use the China factor very well. It expands its population by inviting talents from the Chinese mainland. And also they have invested very much in that study and building up our relationship with the mainland. The second is, it’s very much up within the American system. So we've both advantages from the Chinese mainland and from America, it has a good foundation for further growth. But as for Hong Kong, the China factor is much more important than Singapore. We are facing the hostility of the G7 led by America.
E. Chan: Since you mentioned Hong Kong is… I mean we are right at the doorstep of our motherland, surely geographically, we have an absolute advantage. And there are a lot of…. I still remember, a lot of the Hong Kong businesses do have branches in the mainland, and vice versa, for mainland businesses too and people move to Hong Kong and make Hong Kong an even more vibrant place in shopping and use our professional services. Has that been attributed to the success of Hong Kong, although you're saying that we could have done better. Have we had some improvement?
Prof. Chan: Well, that has contributed to the growth of Hong Kong in the past decades. But it's very limited effect on future development of Hong Kong, because what we have gained is just the money, the surplus from the industrial processing trade. And also there was money diverted from the mainland to Hong Kong. Some of them are rather illegal in nature. And all these cannot help Hong Kong to build up its science and technology basis. And even for the revenues that we get from industrial processing in the mainland, most of the money has been devoted to speculation in the financial market or in the real estate market, they have not contributed to the increase in improving, to their advantage… the competitive advantage of Hong Kong. So in the long term, longer term perspective, this money is useful, but not very good for upgrading Hong Kong, you may miss the competition with other countries, other economies.
E. Chan: So I see… I mean, thank you for bringing that honest perspective. This is what Straight talk wants to hear. One interesting observation, I remember that a few years ago, people were talking about Hong Kong… I mean history repeats itself. I mean, like the city of Venice used to be a very vibrant commercial city. But things change and now just become a very touristy, old town. Will the downturn of Hong Kong be sort of inevitable or can it still be changed, according to your view?
Prof. Chan: In the case of Venice, it went down in history because it had lost the trade revenue from trading with China, the Silk Road trade, but in the case of Hong Kong, even in the future, we will still enjoy very much of the benefit of the China factor. With China growing even faster than before, larger, by size, and also by its capability, Hong Kong should be able to benefit from here. But it depends very much on how Hong Kong grasp the opportunities.
E. Chan: So going back to the title of the show tonight, where do you see Hong Kong in 10 years? Just now you have mentioned Hong Kong hasn't integrated as well as it should be for the future development. But we still benefit… because we're still right at the doorstep of our motherland. So where do you see us in 10 years’ time?
Prof. Chan: Hong Kong will have a slow growth in the coming year if there's no major change of its industrial and also economic structure, but given the growth of our nation and also the expansion of the Belt and Road initiative, Hong Kong should be able to get the benefits of participating in the expansion of mainland’s economy, both spatially and also, structurally. But I'm not sure whether Hong Kong will take up the opportunity. It depends very much on the efforts of the Hong Kong people, whether they are willing and have the knowledge to engage in this kind of restructuring, upgrading Hong Kong economy towards the greater world.
What will be the main obstacle you just mentioned? It depends on Hong Kong people but Hong Kong people, we're all individuals, what can we do? Does it have to be a government-led initiative so that we will engage with the mainland's economy and getting Hong Kong to ride on the fast train?
I think in the past decade, Hong Kong has been too much content with its own achievements. It had not looked at the world's changes. And in the coming years there will be hostility of the G7 led by America against Chinese mainland and also against Hong Kong. So there will be a difficulty in the coming years, but it depends very much on the efforts of the government. If you can mobilize our resources within Hong Kong and with the support of the central government, I think all this hardship could be overcome.
E. Chan: Before we go on a break I want to ask you, President Xi was here recently, and he reiterated Hong Kong must build on a connection with the rest of the world and our unique status. Are we doing that already? Of course with COVID now we really can't do very much. Can you see Hong Kong still has a role to do what President Xi has hopefully we can do for the whole nation.
Prof. Chan: Hong Kong has been very much in contact with the G7, America, Britain and all these European countries, but they will not be the center of the economic growth of the world in the future. So what Hong Kong needs, as President Xi's advice, Hong Kong should engage in a relationship with other countries, the rest of the west. The so-called the new G8,
E. Chan: Oh the G8, what is a new G8 for the viewers' interest?
Prof. Chan: China, Russia, India, Brazil, South Africa, and that will be also Indonesia, Argentina, and there maybe also Mexico.
E. Chan: Alright, maybe we will have a break. And we will be right back.
E. Chan: Welcome back with us tonight is Professor Thomas Chan. And we have been talking about Hong Kong's fundamentals to success. And what we must do if we want to still have a success story to tell in 10 years. So professor, in the first half, you made it very clear, and being very honest to the viewers, saying that Hong Kong could have done better, that we have been too complacent. And we need to change. And also you're saying the international factors are affecting Hong Kong quite considerably, even more so than before. And we could concentrate on the G8, as you have just mentioned, which includes the motherland. Our world has experienced unprecedented challenges with a COVID outbreak. But recently in, say Hong Kong, all the geopolitical tensions between the motherland and US have caused a lot of tensions, sanctions, and not to mention the recent war between Russia and Ukraine. So as a Hong Kong person, how shall we look at all this and how they affected Hong Kong, and what we can do to counteract all the side effects?
Prof. Chan: We should be aware that the competition between China and the US will continue and may even worsen in the coming years. And that means Hong Kong will face the hostility of the G7, led by the US, and Hong Kong had been emerging itself very much into the American system. With the hostility from America, not to mention the sanctions and other measures against the Hong Kong, Hong Kong needs to find our alternative to the way that we deal with other countries.
E. Chan: Professor, as you just mentioned, the recent happenings, such as increased energy cost, increase inflation like the US, like overnight 9 percent. The US interest rate going up, the US dollar going up in a way Hong Kong dollars is worth more money. Is that helping Hong Kong?
Prof. Chan: It depends. The situation seems to be going into a global financial crisis triggered by the situation in America and Europe. But in Hong Kong we will be affected. But it depends very much on Hong Kong's working with the mainland to defend the local financial system. I don't think the financial crisis will spread to Hong Kong provided we have worked closely with the mainland. And that means you will create opportunities for Hong Kong. We had looked at the situation in the G7 clearly that it may not be the future of the world or the future of Hong Kong's development. So Hong Kong has to shift its focus to other countries, other emerging markets. And at a time when the world is not so favorable in terms of business environment, Hong Kong may use the link with the Chinese mainland to achieve a better result in setting up a relationship with these kinds of countries.
E. Chan: Professor, a term that we use a lot in the last few years is globalization. But it looks like we're moving to another term called de-globalization and increased protectionism. So where does that Hong Kong… Would that make Hong Kong more vulnerable than before? Because we do have played a very important role in the external gateway to the rest of the world. How do you see that?
Prof. Chan: I think we have to look clearly at the process of globalization now taking place in the world. There's a de-globalization mostly started from the G7, especially America whereas the rest of the countries in the world are still engaging in each other. There's still a process of globalization going on. And with China's Belt and Road Initiative, you can see that globalization has moved faster in Central Asia, West Asia and even in Africa as well as in South America. So you can see the world is divided in two parts: for the G7, the advanced countries, there is a de-globalization. And with de-globalization I think that the isolation will hurt their economy and society very, very much; and the other part is the rest of the world. They are going on globalization and linking up each other to achieve greater synergy. And so, it makes Hong Kong, facing a choice to still work with G7, to go down with them or to work with the rest of the world which is going up further.
E. Chan: Recently, our Financial Secretary Paul Chan, had said that he has been concluding trade agreements with more trading partners. Is that enough to help Hong Kong to start moving away, I won't say moving away, sort of less reliant on the traditional economies that we work with?
Prof. Chan: The trade agreement will be useful, but it depends very much on our own capability. If we had nothing to offer, then even if we have a very favorable trade agreement, it will not help the economy in Hong Kong. So one thing Hong Kong needs is that we have to upgrade our economy. You have to re-industrialize, not so much the labor industry but all those R&D intensive industries, just like what has been done in major advanced countries. So, we have to build up our research intensive industry. And secondly, we have to link up with other countries so that we can serve as a hub, not only a gateway into the Chinese mainland, but the hub of East Asia, Southeast Asia. Recently I think the Chinese… China-Euro Express train service has linked up Europe and also the other parts of Asia. Hong Kong can engage in it and take advantage of the wide network built by the Chinese mainland.
E. Chan: Professor, what you're saying is apart from having one of our core strengths is being a major international financial center, we have looked at re-industrialization, such as IT, all the development. Is that why President Xi has spent his limited stay in Hong Kong, in the science park? Is that what the motherland sort of hopes Hong Kong will develop in the area?
Prof. Chan: The financial center depends very much on the local economy, and also its link with other parts as well, so the R&D intensive industries are a major factor for boosting up the financial services, as well as there's a logistic and trade hub functions for Hong Kong. So President Xi is willing to see Hong Kong perform a new function, not so much as to serve as a gateway into the mainland, so that the foreign companies can earn money from the mainland, but rather serve the expansion and development of the mainland. And so that you will be using our resources to link up the world much better than other cities within China.
E. Chan: Another matter that we often talk about in Straight Talk is about the Western rhetoric. I mean, Hong Kong people have now realized there is a constant smearing campaign against Hong Kong. And Chief Executive John Lee has said that his government will be bold and proactive in speaking up against the smearing by foreign forces.
Are you confident we'll be able to pass a message to the world that this rhetoric doesn't affect Hong Kong as much as it did?
Prof. Chan: It's not easy because the world’s opinion has been dominated by the US. It will take quite a lot of effort to turn over the situation. But what Hong Kong needs, is that we have to overhaul education, and also its a lifelong learning process so that a proper perspective will be instilled into the people. I think this is the fundamental basis for Hong Kong people to see its role as a part of China to achieve under the “one country, two systems” regime. You have to understand our past and our present, and also the possibility of a future where we can put our effort into it.
E. Chan: Professor, since you mentioned “one country, two systems”, some countries in the world, especially the US, said Hong Kong is moving towards one country, one system, but we know that that's not true. So the momentum of development is another matter that President Xi said that we must continue to do, including the Greater Bay Area, which I've talked about, and also the 14th Five Year Plan. But one very important area that I think you're an expert in, is One Belt, One Road, that you are now the director of the Research Institute. Can you tell the viewers in short, what is One Belt, One Road, and how Hong Kong can participate? Because it seems like they're quite far away to me.
Prof. Chan: The Belt and Road is actually a revival of the historical Silk Road. And the Silk Road, in the last few centuries, has become a globalized system incorporating not just Afro-Eurasia, but also Americas. And so is in fact, a Chinese version of globalization. And the Chinese government had put quite a lot of effort into it. But it's also allowing other countries to participate. So you can see, recently there was a massive infrastructure investment by the EU, which I mean, I understand it’s to link up with China's network in Eurasia, and so this is the way China and the rest of the world build up a networking system for the whole world. So that there's a trade, there was a cultural exchange, there was technology transfer, etc.
E. Chan: But how can Hong Kong people take part of it and be a benefactor out of this great initiative of the old Silk Road?
Prof. Chan: So we had to invite people and companies of the Belt and Road countries to Hong Kong, and also we reach out to them, the fundamental starting points that we have to know about the situation. So far, we know much about America, and also the so-called G7 countries, but we know very little about Belt and Road countries.
E. Chan: But it looks like Hong Kong hasn't done a lot in terms of doing this, have we?
Prof. Chan: Not yet, for example, at the Chu Hai College, we have started two master programs on Belt and Road countries, and they have attracted quite a lot of students from mainland and also from Hong Kong. So it needs to do something.
E. Chan: Alright. Many thanks to Professor Chan for sharing with us his outlook on where Hong Kong is heading in 10 years’ time, and how we can take full advantage of the “one country, two systems”, which President Xi Jinping said is here to stay to ensure a prosperous and stable Hong Kong. Have a good week and good night.