How did Hong Kong grow into such a powerful economy?
Before Britain took over in 1840, Hong Kong was something of a nest of thieves, known as a base for pirates and hardly the sort of place anyone would have predicted would grow into today’s financial powerhouse.
The only hints of civilisation were a small Qing dynasty garrison at Kowloon and a nearby fishing village. The whole southern side of the island, now largely occupied by Repulse Bay, was a hideout for pirates.
Opium and banking
It was drugs run by the British that effectively started this Far Eastern dive for Jack Sparrow and his merry men off on its way to becoming the financial capital of Asia. Specifically, Opium controlled from Britain and distributed from Hong Kong got the ball rolling because its sheer scale and reach necessitated the establishment of sophisticated banking services. In 1865 the Hong Kong and Shanghai Banking Corporation was founded and this organisation then rapidly became the biggest and most influential bank east of Suez.
Hong Kong has also benefited enormously from its unique and rather ambiguous geographical location. It is both a part of China and separate from it, being ruled by British law whilst territorially a part of mainland China. Beijing was uncharacteristically canny here, effectively keeping an isolated window open onto the rest of the world by ceding a limited amount of autonomy to the island.
When Hong Kong rule was passed to the British, the latter was at the apex of empire and trade along the Silk Road was encouraged by the removal of import duties. Similarly, when the Communist Chinese later took the island over they too had by now become an industrial giant and Hong Kong repeated its earlier trick of being the distribution centre of the world.
Migration from PRC
When the Communists first took over China there was a massive brain drain from mainland China to Hong Kong. A large number of rich Chinese came across too, anxious to hang on to their savings and continue to live in the style to which they’d become accustomed, which meant lots of capital injection. There were also many poorer but highly motivated entrepreneurs in the mix.
Later, when the People’s Liberation Army entered Guangdong they halted at the Shenzhen River and for the next 20 years money was moved in and out of the People’s Republic of China only through Hong Kong, endowing the island with massive power and influence.
The effective independence of Hong Kong, despite the close proximity of PRC and its authoritative leanings, is underlined by the fact that the Asian Sentinel is based here. Founded in 2006, this influential British web-based publication was set up to provide a government and media-independent platform for news, opinion and analysis on a wide range of Asian regional and national issues.
Hong Kong has also had rather more than its fair share of sheer luck. It could easily have gone the way of Goa or Aden but instead remained effectively a Western capitalist outpost instead of being snapped up by PRC as many feared would be the case on several occasions.
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