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Chart: Hong Kong on course to be China’s 9th city within a decade

For the last few decades, Hong Kong has been a pretty important place, on the whole. It’s one of the world’s leading financial centres; it tends to rank near the top of the World City league tables; so, when Britain handed the territory back to China in 1997, it was generally seen as a pretty big gain for the Asian giant.

It might come as a shock, then, that, within a decade, Hong Kong will barely scrape into the top 10 of Chinese cities.

So says Trigger Trend, a consultancy based in the nearby megalopolis of Guangzhou, which has been ranking China’s cities based on the size of their economic output. The report in question is, rather selfishly, in Chinese, but here’s the key paragraph in a report in Foreign Policy:

“Hong Kong’s annual GDP growth rate has hovered around two percent in recent years, while major regional centers in China have been growing at over seven percent per year. Hong Kong’s 2013 GDP, at an estimated $261 billion, already pales in comparison to Shanghai’s, at $354 billion, and Beijing’s, at $317 billion. The report also states that at the time of its handover from the British in 1997, Hong Kong’s GDP was 15.6 percent of China’s national total; by 2013, the city’s share had shrunk to 2.9 percent.”

The result of all this is that Guangzhou and nearby Shenzen are on course to overtake Hong Kong by 2017; so is the northern city of Tianjin. By 2022, Honkers will even have been overtaken by such famous and globally-important world cities as Chongqing, Chengdu and Wuhan.

Our Intelligent Unit is slightly more optimistic about Hong Kong’s future – but only slightly, and the overall trend remains clear:

Metropolitan GDP of major Chinese cities compared. Source: CityMetric Intelligence.

There are two obvious reasons why Hong Kong’s economy should be falling behind. One is that it’s a developed economy, and developed economies never grow as fast as emerging ones. Compare a bad year for China with a good year for the US, and the former will still be growing much, much faster.

The other reason other cities are surging ahead is demographics. Since 1997, Hong Kong’s population has grown from around 6.5m to around 7.2m. In any western city that’d be a massive population boom, but it pales in comparison to the growth of its local rivals. Over the same period, Guangzhou grew from something like 9m to somewhere north of 14m. Hong Kong not only isn’t growing that quickly: thanks to the physical constraints inherent to being an island, it probably can’t.

So some relative decline is, perhaps, inevitable. As time goes on, Hong Kong is anyway likely to get subsumed into a larger economic unit. Since 2011, there have been rumours of a plan to merge the cities of the Pearl River Delta – Hong Kong, Guangzhou, Shenzhen and others – into a single, multi-centred economic unit: a sort of Chinese equivalent of Germany’s Rhine-Ruhr region, only much, much bigger.

This, though, will no doubt be cold comfort to the city’s residents. As Foreign Policy notes, there is currently a battle underway for Hong Kong’s soul. In 2017, the city will choose its new chief executive, and for the first time, a genuine election with universal suffrage is on the cards. Beijing, though, is determined to vet the list of candidates first.

How much power central government can exert over the territory will have a major impact on the kind of place it is, Foreign Policy notes:

“[It] remains a first class global city on the strength of its soft power. Hong Kong’s ability to maintain its advantages is largely based on its relative political autonomy from China and the strength of its civic institutions – the very things that recent rumblings from Beijing imperil. Should it lose its uniqueness, Hong Kong’s future as a second tier city in China is all but assured.”

The question is whether Beijing thinks it better to have a world-class city it can’t control, or a minor one that it can.
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