The second favorite question perennially asked in Hong Kong – after the property bubble one – is whether the HKSAR is losing its position as a global business hub. The further decline in trust in Hong Kong for all four of the institutions surveyed by the 2017 Edelman Trust Barometer, with NGOs still fairing best, hardly paints a rosy picture. Indeed, 2016 certainly was a year of flash points, with everything from illegal food stalls to a piece of left luggage threatening to reignite public protests.
Yet, for all the gloomy headlines, 2016 was by no means a year of unrelenting turbulence for Hong Kong, certainly by global standards.
According to the IMD World Competitiveness Yearbook, Hong Kong successfully reclaimed its title as the world's most competitive economy in 2016, despite concerns that it is losing its edge to mainland and regional rivals.
Impressively, there were 128 new listings registered last year on the Hong Kong exchange. This generated over US$25.1 billion in fresh capital and cemented Hong Kong’s position as the single most prolific IPO market globally, despite a 26 percent decline year-on-year. Once again, both GDP and unemployment figures also held relatively steady.
Sound the alarm?
Given the current economic landscape, arguably one of the most alarming findings from this year’s Hong Kong findings is the decline of trust in business. The data illustrates that business as an institution is resoundingly distrusted, earning the backing of just 34 percent of Hong Kongers this year, down from 39 percent last year and considerably lower than trust in both government and media.
When one looks deeper into the drivers of this trend, some of the rhetoric that has propelled the new U.S. president and the U.K. Brexiteers into ascendency seems to have some resonance here in Hong Kong.
Severnty-three percent of respondents agree that the government should protect jobs and local industries at the expense of economic growth if required. Similarly, 60 percent professed a need to prioritize the interests of Hong Kong over those of the rest of the world. While by no means shocking in today’s climate, how one remedies such sentiments with the realities of Hong Kong’s long-entrenched, highly-globalized economic model, poses challenging questions.
Hong Kong’s business leaders appear to have borne the brunt of the growing credibility crisis. Only 27 percent of respondents now deem CEOs to be credible. This is closely mirrored by the paltry 29 percent backing for government officials. This trend shows little sign of abating, with a number of once-revered bastions of industry and society joining the growing list of leaders to be ensnared in high-profile corruption scandals.
Don’t count your chickens…
While it remains to be seen whether the shutters are really coming down on global trade as we know it, 2016 did see some notable openings, including the approval of the Shenzhen-Hong Kong stock trading link. Equally, Hong Kong's role in the One Belt One Road initiative was hammered home as offering the potential to bring fresh impetus to trade in the region and beyond.
Despite this potential, 35 percent of those surveyed here feel like the system is failing them, citing a sense of injustice, desire for change, and lack of hope or confidence. Moreover, one in two Hong Kongers claim to feel “uncertain” about the future, suggesting we find ourselves at a potential tipping point.
This is by no means a simple case of the “haves” versus the “have nots,” with Hong Kong’s high-income and college educated respondents also sharing this sentiment. Across everyone surveyed, corruption and the perceived erosion of social values proved to be the most substantial drivers of these fears.
Only 37 percent of Hong Kongers now believe they will be better off in five years’ time, compared to a more optimistic global average of 51 percent. It is in business’ interest, as well as the communities they serve and operate within, that such fears are proven to be unfounded.
Adrian Warr is managing director, Edelman Hong Kong.