Four graphs showing Hong Kong’s slide down China’s economic order

Tuesday, 9th September, 11:30 HKT

 

17 years since the handover, Hong Kong’s younger mainland siblings have grown up quickly, so now it must fight harder for its share at the dinner table. Below are four graphs from Trigger Trend, a Guangdong based research firm, which highlight Hong Kong’s new economic reality.

Hong Kong’s share of China’s GDP
IMG_2111.JPG
Calculation inc. Hong Kong and Macau, but not Taiwan

At the time of Hong Kong’s return, its share of China’s GDP stood at 15.6%. By 2013, Hong Kong’s share had fallen to just 2.9%, akin to a rounding error.

Hong Kong has numerous advantages over mainland cities, but this graph is striking, highlighting Hong Kong’s new economic reality. From a purely economic size point of view Hong Kong is now just like the other big mainland cities, and this surely would change how it is viewed from Beijing.

Change in total GDP for China’s main cities

IMG_2109.JPG
Hong Kong light blue, Beijing dark blue, Shanghai red, Guangzhou green, Shenzhen purple

When once Hong Kong was way ahead of the pack, it’s now already been overtaken by Shanghai in 2010, and Beijing 2012. As Hong Kong’s GDP remains pretty much constant, based on current trends, it’ll soon be overtaken by it’s two closest siblings in the Pearl River Delta, Shenzhen and Guangzhou. By 2022, the report warns, Hong Kong might fall to ‘second-tier city’ ranking.
Whilst this may delight some of the local Chinese media, it’s inevitable that these much cities would eventually have larger total GDP figures. A fairer example would be a GDP per capita comparison. Yet in this ‘socialist economy with market characteristics’, it’s still the aggregate values that equate to power and prestige.

Stock Exchange Total Mkt. Value (USD millions)

IMG_2112.JPG
HKEX light blue, SHSE & SZSE combined green

Since 2003, the combined value of the Shanghai and Shenzhen stock exchanges have for the most part kept ahead of Hong Kong. In fact, given the low valuations in China’s historically depressed stock-market, this gap could be much larger.

Once China completes the financial reform and opening up processes, including allowing foreign firms to float in China, it’s difficult to see Hong Kong keeping close ten years from now.

Harbour container handling capacity (standard size, 10,000s)

IMG_2209.JPG
Hong Kong light blue, Shanghai dark blue, Tianjin red, Shenzhen green, Guangzhou purple

Known as the gateway of China, one of Hong Kong’s key uses is for two way trade between the mainland and the rest of the world. Once the main port in Greater China, Hong Kong was surpassed by Shanghai in 2007, whilst more recently being pipped by Shenzhen.

It’s natural for Shanghai to resume its historic dominance in China trade, but more worrying for Hong Kong is Shenzhen’s rising trade volumes. Simply because of the geographical proximity, a proportion of Shenzhen’s gains will have come at the expense of Hong Kong. In the future, in which other areas will Shenzhen gain at the expense of Hong Kong?

(Article not to be copied or reproduced without permission or citation).

Chiecon first to publish graph in English media, later picked up by mainstream media:-

Foreign Policy

2nd Sep 2014: http://www.foreignpolicy.com/articles/2014/09/02/report_hong_kong_becoming_mere_second_tier_chinese_city

The Economist

30th Sep 2014: http://www.economist.com/blogs/economist-explains/2014/09/economist-explains-22

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