Internationalization of yuan can boost HK status as offshore financial hub

By Hu Weijia Source:Global Times Published: 2019/7/16 20:24:20

Internationalization of yuan can boost HK status


Beneath the recent unrest in the Hong Kong Special Administrative Region lie concerns about capital outflows. A private banking source in Hong Kong said that the super-rich have begun to shift their assets elsewhere, including to Singapore, the Straits Times reported.

Hong Kong posted capital outflows in 2018 of around HK$150 billion ($19 billion). The era of excess liquidity and large-scale capital inflows as a result of the US Federal Reserve's quantitative easing is over. The world is now watching Hong Kong's capital flows, and analysts forecast that demonstrations by radical activists may accelerate the pace of capital outflows from the city.

Hong Kong's economy will be badly hit by radical protestors, but the central government won't allow Hong Kong to fall into a financial crisis. The central government will provide financial support to Hong Kong if needed and firmly safeguard the status of Hong Kong as a major financial hub in Asia. Hong Kong is still one of the world's freest economies, a position that will never be changed.

In 1997, a financial crisis started in Thailand and spread across East Asia, wreaking havoc on the region's economy. The attack on the Hong Kong dollar raised fears that the local government would be forced to carry out a large devaluation, but the city withstood immense pressure and maintained its currency's broad stability. The reason why Hong Kong was able to survive as a global financial hub during the 1997-98 Asian financial crisis was because of the support from the central government. Two decades later, Beijing is even in a better position and has greater strength to maintain the stability of Hong Kong's economy.

Hong Kong's radical opposition forces are allying themselves with external forces that wish for a collapse of Hong Kong's economy. They give lip service to Hong Kong's freedom but in reality try to trigger a financial crisis in the city and drag down the economy.

Economic links between Hong Kong and the mainland are exactly where the city's advantages lie. At this critical moment, the Chinese central government will not be stingy in drawing up policies to support the Hong Kong economy. Hong Kong has announced a goal of becoming an offshore center for the yuan. The first step is to push forward the internationalization of the yuan.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn
Newspaper headline: Internationalization of yuan can boost HK status


Posted in: EYE ON ECONOMY

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