Hong Kong may have already sunk into a technical recession since the third quarter this year as its economy, bogged down by the trade war between China and the United States – the city’s two largest trading partners – has taken a further beating as unrest in the city stretched into its fourth month.
In the first half of 2019, Hong Kong’s economy was already faltering, and expanded by a mere 0.5% year-on-year, the slowest pace since the 2009 recession. Since July, there have been sharp reductions in visitor arrivals and retail sales, a continued decline in exports as well as deeply dampened business, investment and consumption sentiments.
The People’s Daily has again warned of Hong Kong’s diminishing economic clout when compared with a handful of mainland boomtowns and the city’s arch-rival Singapore.
Hong Kong’s ranking of annual economic output will slip to fifth spot this year, while Guangzhou is poised to surpass the city in gross domestic product as the capital of Guangdong province and a bourgeoning node of trade, commerce and manufacturing serving southern China defied global headwinds and booked a robust year-on-year growth of 7.1% to the tune of 1.17 trillion yuan (US$165.4 billion) in the first half.
Specifically, the passenger and container throughput of Guangzhou’s airport and seaport have both surpassed Hong Kong during the same period.
The Chinese cities that already boast an economy bigger than Hong Kong’s are Shanghai, Beijing, Shenzhen and Guangzhou.
Hong Kong’s economy relative to China’s overall GDP has fallen from a peak of 27% in 1993 to less than 3% in 2017, noted the party mouthpiece.
In 1997, when Britain handed the city back to Chinese sovereignty, Hong Kong’s GDP was still about 20% the size of that of the mainland, and larger than the output of the entire Guangdong province, when during its heyday the former British colony played the pivotal role of a middleman in China’s trade and investments with the rest of the world.
It is also thought that more second-tier cities on the mainland, including Chongqing, Tianjin, Suzhou, Wuhan, Chengdu and Nanjing, may ease the city out of the top 10 league in the next decade as these urban centers grow their economy on the strength of buoyant investment and their sheer population base.
Last year, Singapore also soared past Hong Kong in GDP for the second time in 10 years, though by a small margin – US$364 billion versus US$362 billion – but with a population of five million compared with Hong Kong’s seven million, the Lion City’s per capita GDP is about 40% higher than Hong Kong’s corresponding figure, according to data crunched by the People’s Daily.
Singapore has avoided a technical recession so far, defined as two consecutive quarters of quarter-on-quarter economic contraction, as its economy grew 0.1% on a year-on-year basis in the third quarter and 0.6% quarter-on-quarter.
The city-state stands to benefit most from the chaos in Hong Kong as the latter’s ultra-rich look to park their assets in a safer heaven and multinationals start to spin off operations and move to a more stable financial and business hub.
Singapore has knocked the United States out of the top spot in the World Economic Forum’s annual competitiveness report for 2019, while Hong Kong is in the runner-up spot.