Hong Kong’s implementation of draconian Covid policies threatens its status as an international financial hub. This is seen through Hong Kong Chief Executive Carrie Lam’s execution of Chinese President Xi Jinping’s ‘Zero-Covid’ policy amid crippling economic strain and a fifth wave of Covid-19 infections. Lam’s pandemic strategy, compounded with concerns over the National Security Law (NSL), undermines the liberties that Hong Kong is known for.

Hong Kong as an international financial hub

Strong legal protections for investors are important for financial growth. Hong Kong maintains significantly more investor protections and freedoms than does mainland China. After the 1997 handover, the Chinese and British allowed the city’s democratic and capitalist system to persist autonomously from mainland China’s socialist system. This institutional framework is known as the ‘One Country, Two Systems’ principle. Hong Kong’s preexisting liberal institutions and business-friendly policies, like judicial integrity, rule of law and private property continue to bolster its economic appeal.

Hong Kong also possesses unique economic advantages. Unlike other Chinese cities, Hong Kong maintains a low tax regime, diverse financial markets and free-flowing capital. It is an investor’s gateway into mainland China’s stringently controlled capital markets. The Council on Foreign Relations’ Eleanor Albert notes that its “capitalist features have made Hong Kong one of the world’s most attractive markets and set it apart from mainland financial hubs.”

Hong Kong attracts multinational corporations with its pro-business environment. It consistently ranks among the top five international financial centers, according to the Global Financial Centers Index (GFCI) data. The graph below displays the top five financial centers’ GFCI ratings since 2012, in which Hong Kong steadily rivals its peers. Its high GFCI rating indicates its competitive financial infrastructure, legal protections, and open market norms.