Hong Kong and Shanghai: a tale of two cities in China

Abstract

This research discusses Hong Kong’s long-run role as a preeminent international finance centre in the greater China with a view of Shanghai’s rapid growth. Using a synthesis approach of politics and economics, rather than pure economic analysis and forecasting, it is argued Shanghai is not likely to overtake/replace Hong Kong as an international finance hub in the region. Hong Kong will still keep its position in many years to come even if Shanghai has made enormous efforts to rebuild its financial industry. Due to their diverging industry structure, sheer size of the country, and most importantly different positioning by the central and local governments, the two cities are not necessarily rivals, but can actually be complementary partners, serving two non-overlapping hinterlands. This research also asserts that Hong Kong’s integration with the mainland economy is essential for its increasing competitiveness, while putting emphasis on policy reform for Hong Kong to maintain a strategic advantage over Shanghai.

Does It Pay to Issue Green? An Institutional Comparison of Mainland China and Hong Kong’s Stock Markets Toward Green Bonds

“…On the other hand, Hong Kong’s green bond market links to its political environment have not been examined much in the literature. However, in general, the Hong Kong market is seen as being more mature and in tune with international markets ( Chiou and Lee, 2013 ; Sheng, 2018 ). However, since the mid-1980s, the financial markets for this region have been “increasingly integrated due to unilateral direct investments in China from private sectors in Hong Kong” ( Chiou and Lee, 2013 , p. 342).…”

“…Regarding the maturity of the economy and its stock market, the volatilities and mean–variance efficiency of stock returns in Hong Kong are less risky than those in Mainland China, indicating that Hong Kong is a more mature economy overall ( Chiou and Lee, 2013 ). The institutional influence is also reinforced by “Hong Kong [being] one of the world’s ten largest banking centers, the fifth largest forex markets, and the third largest stock market, [as well as having] more foreign banks in Hong Kong than in Singapore and Japan combined” ( Sheng, 2018 , p. 173). Being such an international finance center indicates the strong institutional policy factors that are now shaping Hong Kong’s stock market reactions and how they might differ from those in China.…”