[Annotated] Hong Kong, the global capital of hustle, is gripped by self doubt

The sense of pervading^[각주:1] gloom about^[각주:2] the mainland’s control and Shanghai’s rivalry^[각주:3] is overdone^[각주:4]

OF THE world’s three great commercial centres—New York, London and Hong Kong—two are on the defensive^[각주:5]. London faces a rupture with^[각주:6] the European Union, which wants to seize^[각주:7] the City’s euro-related activities and shift them inside the currency zone. In Hong Kong the fear is of deeper assimilation by^[각주:8] mainland China, followed by irrelevance^[각주:9].

Entrepots^[각주:10], after all, can become obsolete^[각주:11]. Venice once teemed with^[각주:12] merchants, not tourists. Yet while London’s problem is complacency^[각주:13], Hong Kong’s pessimism^[각주:14] seems overdone. It remains vital both to^[각주:15] China and to the country’s trading partners^[각주:16]—the adaptor^[각주:17] that converts the mainland’s financial and legal voltage into the one used by the rest of the world.

Today’s gloom partly^[각주:18] reflects a fear of^[각주:19] Chinese autocracy. During Schumpeter’s recent visit, Xi Jinping, China’s president, in town for^[각주:20] the 20th anniversary of the resumption of^[각주:21] mainland rule^[각주:22], warned that, while the constitutional^[각주:23] structure of “one country, two systems” remains intact^[각주:24], Hong Kong must not cross^[각주:25] any political “red lines^[각주:26]”. Business folk have^[각주:27] three worries^[각주:28]: that Hong Kong will be usurped by^[각주:29] Shanghai; that it can no longer claim to be a pan-Asian^[각주:30] hub; and that it is a laggard in technology^[각주:31].

Hong Kong has serious clout^[각주:32]. It hosts^[각주:33] the world’s fourth-biggest stock exchange^[각주:34] and currency market^[각주:35]. It is a hub for cross-border loans^[각주:36]. About half of China’s outward^[각주:37] direct investment flows through^[각주:38] it. After 2000 the city’s lawyers, bankers and consultants helped scores of^[각주:39] China’s big state-owned firms list shares there. Hundreds of private mainland firms also use Hong Kong to list and as a springboard for^[각주:40] foreign expansion^[각주:41]. There have been a few scandals—regulators^[각주:42] have halted^[각주:43] trading in 13 private mainland firms since 2011—but these make up less than 1% of^[각주:44] total market capitalisation. The overall quality of supervision^[각주:45] is strong.

In 2009 China said that Shanghai would be a global financial centre by 2020 (presumably^[각주:46], displacing^[각주:47] Hong Kong). But while its stockmarket is almost as large as Hong Kong’s, economic liberalization^[각주:48] has stalled on^[각주:49] the mainland. China’s financial and legal systems are isolated. Foreign banks are all but^[각주:50] excluded—they have underwritten^[각주:51] just 8% of mainland securities^[각주:52] issued so far this year. Mainland financial firms have too little muscle outside China and most have boards that lack international experience.

As well as being cut off, the mainland’s financial system is not trusted by foreigners. The banks are assumed to fudge their figures^[각주:53]. Property rights^[각주:54] are fluid^[각주:55], as evidenced by^[각주:56] crackdowns on^[각주:57] tycoons^[각주:58] in the past three years. Deng Xiaoping said that some people should be allowed to get rich^[각주:59] first. In mainland China under Mr Xi, to be rich is perilous^[각주:60]. The result is that few multinationals^[각주:61] would domicile a big holding company^[각주:62] on the mainland under its opaque^[각주:63] laws and tax code^[각주:64]. Wall Street’s five biggest banks have cut their total credit exposure^[각주:65] to the mainland by 20% since 2014. China wants the yuan to be a more important currency, but its “three steps forwards, two steps back” approach to lifting^[각주:66] capital controls^[각주:67] gets in the way^[각주:68]. The pool of yuan deposits held offshore has fallen by 47% since 2014. All this will hold back^[각주:69] Shanghai.

China’s trade and corporate footprint is growing but with regard to^[각주:70] finance and law, “it is no longer interested or able to change itself to fit the world^[각주:71]”, says a finance firm’s chief. That is why Hong Kong’s role as an adaptor is so important, and one that China appears to accept. Take “stock connect”, a newish^[각주:72] link between the Shanghai and Hong Kong exchanges. Instead of a riot of free trading by individuals, buy and sell orders are aggregated by^[각주:73] the authorities on both sides of the border, and settled bilaterally^[각주:74] once a day. China can keep tabs on^[각주:75] mainland investors and it requires them to repatriate^[각주:76] the proceeds of^[각주:77] share sales^[각주:78], in yuan.

The authorities in Hong Kong want more multinational firms to list in the city, enabling mainland citizens to invest in them, with China’s approval^[각주:79]. To attract them, Hong Kong intends to^[각주:80] alter its rules^[각주:81] to allow firms with dual-share classes^[각주:82] (such as Alphabet and Facebook) to list. The change should also attract startups.

What about the second worry, that Hong Kong is no longer a pan-Asian hub? It is true that firms in India and South-East Asia look to^[각주:83] its long-standing^[각주:84] rival, Singapore. It does not help that Mandarin is challenging English as the language of business in Hong Kong. And China’s “One Belt, One Road” (OBOR) policy to strengthen its regional links is being led by state banks with their headquarters in^[각주:85] Beijing, not by Hong Kong institutions. Yet Hong Kong has good regional links. Two of the three biggest global banks in Asia—Citigroup and HSBC—run operations from the city. It is through its arm in^[각주:86] Hong Kong that China’s most global bank, Bank of China, is expanding in South-East Asia.

The city has become a pan-Asian life-insurance hub in^[각주:87] the past decade, hosting the two large regional competitors, AIA and Prudential as well as FWD, an upstart worth several billion dollars. One of Indonesia’s largest foreign investors, Jardine Matheson, has its headquarters in Hong Kong. As for the OBOR project, private firms doing business will need contracts and financing^[각주:88].

New territories

Hong Kong’s true weakness is technology. Singapore has two unicorns—unlisted^[각주:89] firms worth over $1bn—Sea, a shopping and online-gaming firm, and Grab, a ride-hailing^[각주:90] company. It hosts the Asian headquarters of several big Silicon Valley firms. Of China’s technology giants, only Tencent is listed in Hong Kong. The city could, however, become the laboratory where Chinese and Western financial innovation meet. Ant Financial, China’s fintech giant, is launching its first foreign mobile wallet in Hong Kong. Citi Asia is leading Citi’s charge to win digital customers.

Perhaps China will ignore its own economic interests^[각주:91] and rip up^[각주:92] Hong Kong’s rule of law. Or perhaps the city’s decline^[각주:93] will be more insidious^[각주:94], with its regulators and courts decaying^[각주:95]. Still, one of Hong Kong’s biggest problems is its own lack of confidence. For a rock^[각주:96] that was made rich by refugees, that is unbecoming^[각주:97].

1. pervading ; [형용사] 만연한 ;; pervade ; [타동사][VN] (격식) 만연하다, (구석구석) 스며[배어]들다 [본문으로]
2. gloom ; 1. [U , sing.] 우울, 침울 [본문으로]
3. rivalry ; [C , U] (pl. -ries) ~ (with sb/sth) (for sth) | ~ (between A and B) (for sth) 경쟁 (의식) [본문으로]
4. overdone ; 2. 과도한, 과장된 [본문으로]
5. be[stand, act] on the defensive ; 방어 자세를 취해, 수세에 서서; (비판 따위에 대해) 신경질적이 되어 [본문으로]
6. rupture ; 4. (격식) (관계의) 결렬, 불화 [본문으로]
7. seize ; 2. ~ sth (from sb) (흔히 폭력을 써서) 장악하다, 점령하다 [본문으로]
8. assimilation ; 1. [U] 흡수; 동화 [본문으로]
9. irrelevance ; (또한 드물게 ir・rele・vancy / -ənsi /) 1. [U] 무관함 [본문으로]
10. entrepot ; [명사] (불어에서) 수출입항, 화물 집산지 ;; US [|ɑ:ntrəpoʊ] UK [|ɒntrəpəʊ] [본문으로]
11. obsolete ; [형용사] 더 이상 쓸모가 없는, 한물간, 구식의 ;; US [|ɑ:bsə|li:t] UK [|ɒbsəli:t] [본문으로]
12. teem with ; (사람들·동물들 등이) 바글[와글]거리다, …로 풍부하다. [본문으로]
13. complacency ; [U] (보통 못마땅함) 현 상태에 만족함, 안주 [본문으로]
14. pessimism ; [U] ~ (about/over sth) 비관적인 생각[기분]; 비관주의 [본문으로]
15. vital ; 1. ~ (for/to sth) 필수적인 [본문으로]
16. trading partner ; [명사] 무역 상대국. [본문으로]
17. adaptor ; 1. (각 별개의 전기 기구를 연결하는 데 쓰는) 어댑터 2. (英) (두 개 이상의 기구를 꽂을 수 있도록 소켓에 연결하는) 어댑터 [본문으로]
18. partly ; [부사] 부분적으로, 어느 정도 [본문으로]
19. reflect ; 3. [타동사][VN] (사물의 속성・사람의 태도・감정을) 나타내다[반영하다] [본문으로]
20. in town ; 재경(在京)하여, 상경중에 [본문으로]
21. resumption ; [sing., U] ~ (of sth) (격식) 재개 [본문으로]
22. rule ; 5. GOVERNMENT/CONTROL | [U] 통치, 지배 ;; 참고 ; home rule [본문으로]
23. constitutional ; 2. 합헌적인, 헌법에 따르는 [본문으로]
24. remain intact[undamaged, untouched] ; 고스란히 남다, 파손을 면하다 [본문으로]
25. cross ; 4. OPPOSE | [타동사][VN] (사람의 계획・바람 등에) 반대하다[거스르다] [본문으로]
26. red line ; [명사] 레드 라인(불화・협상 시 한쪽 당사자가 양보하지 않으려는 쟁점이나 요구) [본문으로]
27. folk ; 4. [pl.] (특정 국가・지역 출신 또는 특정한 생활방식을 가진) 사람들 ;; 영국식으로 folks 가 아닌 folk로 쓰고 복수로 받은 것을 확인 [본문으로]
28. worry ; 2. [C] ~ (about/over sth) | ~ (for/to sb) 걱정거리, 걱정(되는 일) [본문으로]
29. usurp ; [타동사][VN] (격식) (왕좌・권좌 등을) 빼앗다[찬탈하다] ;; US [ju:|z3:rp] UK [ju:|z3:p] [본문으로]
30. pan- ; [형용사・명사에서] <‘…을 다 포함하는', ‘… 전체와 관련된'의 뜻을 나타냄> [본문으로]
31. be a laggard in ; ~ 에 느리다, 뒤쳐지다 [본문으로]
32. clout ; 1. [U] 영향력 [본문으로]
33. host ; 1. (행사를) 주최하다 [본문으로]
34. stock exchange ; [명사] (주로 단수로) 증권 거래소 [본문으로]
35. currency market ; (국제금융) 통화시장 [본문으로]
36. cross-border ; [형용사] (명사 앞에만 씀) 국경을 넘는 [본문으로]
37. outward ; 3. (중심・특정 지점에서) 밖으로 향하는 [본문으로]
38. flow through ; ~를통해 흐르다, 통하다 [본문으로]
39. scores of ; 많은 [본문으로]
40. springboard ; 2. ~ (for/to sth) (어떤 활동의) 발판[출발점] [본문으로]
41. expansion ; [U , C] 확대, 확장, 팽창 [본문으로]
42. regulator ; 1. (산업・상업 분야의) 규제[단속] 기관[담당자] [본문으로]
43. halt ; [동사] 멈추다, 서다; 세우다, 중단시키다 ;; 참고 track n. [본문으로]
44. make up ; ~을 이루다[형성하다] [본문으로]
45. supervision ; 1. [U] 감독, 관리, 지휘, 감시, 통제 [본문으로]
46. presumably ; [부사] 아마, 짐작건대 [본문으로]
47. displace ; [흔히 수동태로] 1. 대신[대체]하다 [본문으로]
48. economic liberalization ; 경제적 자유화 [본문으로]
49. stall ; 4. 교착 상태에 빠뜨리다, 지연시키다; 교착 상태에 빠지다, 지연되다 [본문으로]
50. all but ; 거의 [본문으로]
51. underwrite ; 3. (주권・채권 등을) 인수하다 [본문으로]
52. securities ; [명사] 증권 [본문으로]
53. fudge ; [타동사] <신문 기삿거리 등을> 날조하다, 지어내다(fake) ((up)); 조작하다; 속이다; 피하다 [본문으로]
54. property right ; 재산권 [본문으로]
55. fluid ; 2. (격식) (상황이) 유동[가변]적인 [본문으로]
56. evidence ; [타동사][VN] [주로 수동태로] (격식) 증언[입증]하다; 증거가 되다 [본문으로]
57. a crackdown on ; …에 대한 단속. [본문으로]
58. tycoon ; [명사] (재계의) 거물 [본문으로]
59. get[become, grow] rich ; 부자가 되다 [본문으로]
60. perilous ; [형용사] (격식 또는 문예체) 아주 위험한 ;; US.UK [|perələs] [본문으로]
61. multinational ; 다국적 기업 [본문으로]
62. domicile ; [타동사] to establish in or provide with a domicile ;; to establish in a domicile ;; to establish or be established in a dwelling place ;; US [|dɑ:mɪsaɪl;|doʊm-] UK [|dɒmɪsaɪl] [본문으로]
63. opaque ; 2. (말・글이) 불투명[불분명]한, 이해하기 힘든 [본문으로]
64. tax code ; (회계세무) 세법 [본문으로]
65. credit exposure ; Credit exposure is the total amount of credit extended to a borrower by a lender. The magnitude of credit exposure indicates the extent to which the lender is exposed to the risk of loss in the event of the borrower's default. Credit exposure can be minimized through purchasing credit default swaps or other types of financial instruments. [본문으로]
66. lift ; 4. REMOVE LAW/RULE | [타동사][VN] (제재를) 풀다[해제/폐지하다] [본문으로]
67. capital control ; (경제) 자본통제(資本統制) [본문으로]
68. get in the way (of) ; 방해되다[방해하다] ;; prevent somebody from doing something; prevent something from happening [본문으로]
69. hold back ; 2. (진전·발전을) 방해[저해]하다 [본문으로]
70. with regard to ; …에 관해서는. [본문으로]
71. change .. to fit ~ ; ~에 맞게 ..를 변경하다, 바꾸다 [본문으로]
72. newish ; [형용사] 다소 새로운 [본문으로]
73. aggregate ; [타동사][VN] [주로 수동태로] ~ sth (with sth) (격식 또는 전문 용어) 종합하다 [본문으로]
74. bilaterally ; [부사] 양 방향으로, 쌍무적으로. [본문으로]
75. keep (close) tabs on ; [동사] 계산하다; 확인하다, 감시하다. ;; 동의어 ; keep an account of; check on, observe. [본문으로]
76. repatriate ; 2. (상업) (돈・수익을) 본국으로 송금하다 [본문으로]
77. proceeds ; [pl.] ~ (of/from sth) (물건 판매・행사 등을 하여 받는) 돈[수익금] [본문으로]
78. share sale ; 지분 매각 [본문으로]
79. approval ; 2. [U , C] ~ (for sth) (from sb) (특히 계획・요청에 대한) 승인 [본문으로]
80. intend to ; ~할 작정이다, ~하려고 생각하다, 의향이 있다 [본문으로]
81. alter ; 1. 변하다, 달라지다; 바꾸다, 고치다 [본문으로]
82. dual class stock ; A dual class stock is the issuing of various types of shares by a single company. A dual class stock structure can consist of stocks such as Class A and Class B shares, and where the different classes have distinct voting rights and dividend payments. Two share classes are typically issued: one share class is offered to the general public, and the other is offered to company founders, executives and family. The class offered to the general public has limited voting rights, while the class available to founders and executives has more voting power and often provides a majority control of the company. [본문으로]
83. look to ; (개선 방안을 찾기 위해) ~을 생각해[고려해] 보다, [동사] 돌보다, 보살피다; …에 주의하다, 경계하다; 기대하다; …에 기대를 걸다. ;; 동의어 ; attend to; give attention to; expect; turn to, depend on. [본문으로]
84. long-standing ; [형용사] (주로 명사 앞에 씀) 오래된, 오랫동안[여러 해]에 걸친, 다년간의. [본문으로]
85. headquarters ; [U+sing./pl. v., C] (pl. head・quar・ters) (약어:HQ) 본사[본부] (직원들) ;; "Headquarters" when used for the main offices of a company is more commonly plural as in "The headquarters are in Paris". Headquarters to denote authority is frequently singular as is "Headquarters has said we must used less paper." However singular use is not wrong. [본문으로]
86. arm ; 3. [U] 힘, 권력; [속어] 지배력, 영향력; [미·속어] 경관 [본문으로]
87. hub ; [주로 단수로] ~ (of sth) (특정 장소・활동의) 중심지, 중추 [본문으로]
88. financing ; [U] 자금 조달, 융자, 조달 자금 [본문으로]
89. unlisted ; [형용사] 1. (특히 주식이) 상장되지 않은 [본문으로]
90. ride-hailing ; 전화나 스마트폰 어플 등을 이용해서 택시를 직접 불러서 이용할 수 있는 새로운 형태의 교통수단. ride hailing의 예로 Uber나 Lyft등이 있다. [본문으로]
91. economic interest ; 경제적 이익 [본문으로]
92. rip up ; ~을 갈기갈기 찢다 [본문으로]
93. decline ; [C , U] [주로 단수로] ~ (in sth) | ~ (of sth) (수・가치・품질 등의 지속적인) 감소[하락/축소] [본문으로]
94. insidious ; [형용사] (격식 못마땅함) 서서히[은밀히] 퍼지는 [본문으로]
95. decay ; 3. [자동사][V] (권력・영향력 등이) 쇠퇴[퇴조]하다 [본문으로]
96. rock ; 8. PERSON | [C] [주로 단수로] (믿고 의지할 수 있는) 바위처럼 든든한 사람 [본문으로]
97. unbecoming ; (격식) 1. (어떤 사람에게) 어울리지 않는 2. ~ (to/of sb) 부적절한 [본문으로]