Kahon Chan
China Daily
Publication Date : 08-07-2015
The belief Hong Kong will fall behind increasingly successful neighbouring cities has been expressed a lot recently — and also mentioned in international competitiveness reports. But such a conclusion should be considered very carefully with a view to the big picture.
Any complacency on Hong Kong’s part disappeared in mid-May when the Chinese Academy of Social Sciences (CASS) put Hong Kong behind neighbouring Shenzhen in its annual competitiveness ranking of 294 Chinese cities.
Hong Kong didn’t so much slip as stagnate when it came to innovation, the academy said. Despite this, the official think tank rated Hong Kong as the second-best city in the nation.
The result was widely cited by community leaders to illustrate Hong Kong’s competitiveness during recent discussions on electoral reform. But now that the reform package has been voted down, Hong Kong’s outlook has, in some ways, become even gloomier.
The pessimists base their arguments on tensions with the mainland and the limited supply of land which constantly pushes property prices up. The size of Hong Kong’s working population is tipped to peak in the next three years. Moreover, the problem of a growing aging population could drain the city’s large pool of financial reserves within a decade.
Yet global rankings produced elsewhere continue to show Hong Kong holding its own among powerful and developed economies.
Quantitative measurements of competitiveness can be a difficult business. They are often based on assumptions and outdated information. They can also be biased and weighted toward the priorities of the people drawing up the rankings, explained Chinese University of Hong Kong veteran economist Sung Yun-wing.
“Actually these aren’t something very subjective or scientific,” he said. The CASS poll, for instance, has always placed heavy emphasis on innovation, he said.
Hong Kong ranked 32nd for capacity for innovation among 143 economies in a World Economic Forum (WEF) competitiveness report issued last September, in which the Chinese mainland finished at 40. WEF’s Global Information Technology Report published in April put Hong Kong at 14th, and the mainland at 64th.
Switzerland-based International Institute for Management Development (IMD) continues to rank Hong Kong as the world’s second most competitive economy while the mainland came 20 places behind the SAR. Two-thirds of indicators in the IMD survey were from interviews with 6,234 international executives.
Sung said while gross domestic product (GDP) would be an obvious factor to be included, surveys differ on weighting and selection of interview samples.
Whether the results were good or bad, drawing direct comparisons between economies had inherent flaws, Sung said. This is often due to the inconsistency of available information as well as accuracy of the data.
Not satisfied with this approach, others seeking to influence policy are now focusing on the future. Lingnan University economist Ho Lok-sang, for example, is in charge of a running survey on Hong Kong’s competitiveness for lawmaker Regina Ip Lau Suk-yee’s Savantas Policy Institute think tank.
Ho said his job was to identify areas where Hong Kong could improve. He noted that while Hong Kong could fall behind competitors, the city still received rave reviews when it came to infrastructure, security, the rule of law, quality of life and educational standards.
The SAR also remains a prime transit point for global foreign direct investment. Indeed, the United Nations Conference on Trade and Development 2015 World Investment Report ranked Hong Kong first, for the first time, in inflows and second in outflows of foreign capital.
Yet despite these encouraging numbers, academics stressed that Hong Kong cannot afford to rest on its laurels. The focus now should be more on improving areas the city is weak in.
Hong Kong Baptist University’s economist Mo Pak-hung said opposition lawmakers and members were increasingly abusing the city’s legislature with filibusters and other tactics. This would ultimately affect on the city’s economic growth.
CUHK’s Sung warned that the “localist” movement and uncooperative opposition tactics in Hong Kong have made the city less attractive to talented mainland people. This has already been seen in a declining number of applications by mainland students to attend local universities.