Hong Kong’s Transformation as Financial Centre

Abstract

Over the past century Hong Kong’s status as an international financial centre (IFC) seemingly ebbed and flowed as wars, a world depression, economic booms, and geopolitical restructurings of imperialism and the end of colonialism swept across Asia. Even as the political status of Hong Kong was resolved during the years leading up to its return to Chinese sovereignty in 1997, fears about the strength of its financial sector increased, but these worries abated prior to the handover. Then the Asian financial crisis hit in 1997, the economy of Hong Kong shrank drastically, and the financial sector retrenched, raising anew the concern that the city’s rank as a financial centre rested on weak foundations. As financial activity expands, questions about the resilience of this recovery lurk behind many statements of financial officials and other observers.¹