That is very much how China planned it. In pushing for the meetings to be held in Hong Kong, just a few months after Britain handed back its capitalist colony, Beijing wanted to signal continuity and a determination to maintain the territorys position as the regions leading financial centre.
I suspect the prophets of doom have been disappointed, says Donald Tsang, financial secretary, referring to predictions of economic decline and political turmoil made before the handover on July 1. But these are early days. The big question for the ranks of financiers and policy-makers assembling in Hong Kong is whether the territory will maintain for the long run its edge as a regional financial centre.
Despite the lack of visible change, the regional financial crises and the economic reform plans announced last week at Chinas Communist party congress will both shape Hong Kongs prospects as a financial centre.
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As with the challenges of the transition, both present risks as well as rewards. Chinas actions so far provide reasons for optimism. The way we have dealt with speculative attacks on our currency and our US$1 billion (600 million) contribution to the rescue package for the baht is ample demonstration of who is calling the shots in the management of Hong Kongs financial affairs, says Anson Chan, chief secretary and staunch defender of the territorys autonomy.
While this hands-off approach has eased concerns about mainland meddling, Beijing is also providing new business opportunities. President Jiang Zemins commitment to industrial restructuring, underlined in his party congress speech, signalled further share and debt issues in Hong Kong.
According to Edgar Cheng, chairman of the stock exchange, mainland companies have already raised about US$4.3bn over the past five years through initial public offerings (IPOs), securing the territorys position as Chinas international capital market. Hong Kong investors are now preparing for the next wave of funding. If you asked me before to invest in these industries I would say No, says James Tien, chairman of the general chamber of commerce, referring to President Jiangs reform plans. But if they are made more efficient and allowed to lay off workers, then it gives us an opportunity.
Mainland reforms provide a substantial boost for Hong Kongs financial services industry, marking a contrast with the rest of the region. From the investment banking point of view the game is very much Hong Kong and China at the moment, says John Mulcahy, managing director of Indosuez W.I. Carr. IPO activity in Asean is dead for the time being. Hong Kongs relative attraction in the region has also been underlined by the turmoil elsewhere.
There was no hint of interference in the market, as we saw in Malaysia, for instance, says one European banker. : The fact that the market got battered for a while was testimony to its openness and liquidity. Fund managers needed to raise funds fast to cover redemptions and Hong Kong is big and liquid.
Like others in the financial community, however, the banker cites pitfalls alongside Hong Kongs potential.
The traditional concern about costs has been heightened by depreciations elsewhere in the region. Some see a threat of an asset price bubble.
While few expect a serious threat to the currency peg to the US dollar, the linchpin of the territorys financial system, higher interest rates needed to support the Hong Kong dollar are likely to erode banks profits and could damage the property market.
There is also a downside to Hong Kongs China connection. Over-emphasis on the mainland market would reduce the defensive merits of diversification for the financial services sector.
It also raises concerns relating to regulation authority and market practices. The biggest risk as far as I can see is that Hong Kong loses its authority from a regulatory point of view, says Mulcahy at Indosuez W.I. Carr.