Electrical storm

摘要

THE BEST way to get your head around the role that Hong Kong plays in the global financial system, says a business figure there, is to think of it as an electrical transformer that connects two circuits with different voltages. One is the global financial system with its freewheeling capital flows, open dissemination of information and the rule of law. The other circuit is China's vast and growing financial system with its controls on capital, censorship and capricious enforcement of contracts. Over the past two decades, as China has risen to become the world's second-largest economy, Hong Kong has skilfully cultivated its role in the middle, such that it has become the most important international financial centre after New York and London. Around Victoria Harbour, China's tech tycoons flog shares to Californian hedge funds, its state-run banks issue loans to fund Belt and Road projects and its authorities intervene to control its tightly managed exchange rate. Much of the business is denominated in the world's reserve currency, the dollar, organised by Western firms and overseen by independent courts and regulators that have more in common with their peers in the rich world than with their counterparts in Beijing or Shanghai.