Law tailored to boost HK development

The promulgation of the national security legislation for Hong Kong by the special administrative region's government on Tuesday will end the violent activities of anti-government demonstrators while plugging the national security loopholes in the SAR.

Since China's top legislature passed the law at a time when Beijing and Washington－indeed the whole world－are undergoing unprecedented changes, will Hong Kong's violent protesters continue to be ambivalent about China's sovereignty over the SAR?

Will some in Hong Kong continue to oppose Hong Kong becoming a part of the central government-proposed Guangdong-Hong Kong-Macao Greater Bay Area development plan?

And will Hong Kong continue to follow the "small government, big market" economic model and cling to the "colonialera" political-business-governance coalition system?

External elements' aim to contain China's rise

At the core of Hong Kong's problems were, are and will be internal and external political issues and political wranglings. Externally, the governments of the United States, the United Kingdom, Taiwan and other regions have long interfered in Hong Kong's affairs and used it as a base for anti-Beijing activities in a bid to contain Beijing's rise.

Containing the peaceful rise of China seems to have become a political consensus in the US. In fact, the US House of Representatives has passed the so-called Hong Kong Human Rights and Democracy Act and Hong Kong Autonomy Act, and is expected to continue interfering in the SAR.

Ever since the novel coronavirus pandemic broke out, the US administration has been desperately trying to isolate Chinese people, products and services from the rest of the world, ostensibly as part of its "stress test" to evaluate the US market's endurance, and prepare for a possible "decoupling" of the US and Chinese economies. Which shows the US will continue using Hong Kong to attack Beijing, especially to conduct more "stress tests" leading to "financial decoupling".

The national security law is designed to maintain Hong Kong's political, economic and social stability. And while helping maintain Hong Kong's prosperity and stability, the central government will also assist the SAR government in addressing the deep-seated problems ignored or neglected for years. The central government will also take measures to ensure Hong Kong returns to the track of development after the social unrest and violence.

Helping SAR return to development track

The first major challenge for Hong Kong is how to consolidate its position as an international financial, shipping and logistics hub, so it can keep its special role in China's development. As such, the central government should take measures to help Hong Kong strengthen its status as a global financial and logistics center.

But will the national security legislation's introduction keep international investors away from the SAR?

International investors are more interested in a stable social order in Hong Kong, and getting appreciable returns on their investments. And if investors dare to invest in major global financial hubs such as New York and London despite the US and the UK having harsher national security laws, there is no reason why they would reject Hong Kong.

Still, Hong Kong needs to develop more global trading products such as index futures, options products and other derivatives to attract a wider range of global investors, while the central government should work out plans to help strengthen Hong Kong's position as a global financial hub, in order to attract more global investors to the mainland market through Hong Kong.

The global economy has slipped into recession. The International Monetary Fund recently forecast the global economy will shrink 4.9 percent this year.

Yet at a time when economies across the world are running on half steam at best, the Chinese mainland is expected to be the only major economy to register GDP growth. Which will help the mainland to attract more and more foreign talents, which in turn will make Hong Kong, as the gateway to the mainland's market, more attractive for such talents.

Actually, to attract more international talents, the SAR government could learn from the Hainan provincial and Shenzhen city governments, which treat foreign talents as a "treasure", especially because only after a city has a considerable number of international talents can it attract more resources and capital, and gain advantage in the competition with other resource-rich cities.

The second major challenge facing Hong Kong is how to alleviate poverty. Perhaps due to the inherent "urban bias" among Hong Kong's elites, or the insufficient efforts of the incumbent SAR government to reduce poverty since it took office in July 2017, the number of poor in the city has climbed to about 1.5 million. This means one in every five Hong Kong residents is poor, which is a 10-year high.

And like the rest of world, poverty is the cause of a large number of social and political problems in Hong Kong, and a big obstacle to its future economic development.

By contrast, the number of people living in extreme poverty on the Chinese mainland dropped from 98.99 million at the end of 2012 to 5.51 million at the end of 2019, an average annual reduction of more than 13 million, prompting the World Bank to describe it as "one of the greatest events in human history" and UN Secretary-General Antonio Guterres to say China's poverty-alleviation work could provide useful lessons for other developing countries.

Perhaps the central government could show the Hong Kong government, which has exhausted almost all its political energy handling the year-long violent demonstrators and maintaining law and order in the city, how to effectively alleviate poverty.

Mainland can facilitate HK's industrial transformation

For the SAR, the third big challenge is how to carry out industrial transformation and boost development. Due to historical factors, in the 23 years since its return to China, Hong Kong has not been able to transform its economy.

But now that the national security law has been promulgated, the central government is expected to help Hong Kong to become a global science and technology innovation center by accelerating the construction of the Guangdong-Hong Kong-Macao Greater Bay Area which in turn will help the SAR government to work out macroeconomic policies to facilitate Hong Kong's industrial upgrading and economic transformation.

The central government could also help the SAR government gradually establish a new governance model for the city, which, by adopting more pro-poor policies, can create more avenues for Hong Kong residents' upward mobility and new channels for inclusive social development.

Mutual understanding needed to better fight challenges

The fourth major challenge is how to promote mutual understanding between Hong Kong and mainland compatriots and integrate the SAR economy into the national economy.

After the implementation of the national security law, the central government could make the integration of Hong Kong with the mainland a higher strategic policy and encourage more mainland universities and research institutions to set up branches in Hong Kong and Macao.

Similarly, if some Hong Kong universities and institutions set up branches on the mainland, scholars, researchers and students from both sides can better understand the similarities and differences between mainland and Hong Kong compatriots.

It will also allow SAR residents to see for themselves the great changes occurring on the mainland, and thus improve mutual understanding between mainland and Hong Kong compatriots.

To realize such difficult changes, Hong Kong needs to establish a new set of values, ones that facilitate its transformation and development. Only in this way can Hong Kong gain a stronger development momentum and play its due role in promoting stronger national development.

The author is chairman of Guangzhou-based China Silk Road iValley Research Institute.

The views don't necessarily reflect those of China Daily.