Hong Kong has been the gateway to China for decades. In recent years, China's rapid economic growth has benefited the territory, and during the global financial crisis, Chinese funds have helped the territory ride out the storm.
In September, HSBC, one of the world's largest banks, announced that the office of its chief executive will be relocated to Hong Kong. HSBC's chief executive moved to London in 1993, four years before the former British colony reverted to Chinese sovereignty.
Stephen Green, the bank's chairman, says its return underscores Hong Kong's place in a changing global business environment.
"What is going on in the macro-economy of the world is a shift in the center of gravity from West to East...it therefore seems to us it would be a logical consequence of this that we should have the weight of management in the center of gravity," Green said.
In the past, some in the business community feared the mainland's economic opening would diminish Hong Kong's role as the gateway to China. But executives say, Hong Kong remains important to China.
Hong Kong is the preferred stock market for Chinese companies to raise funds. They come to list on its stock exchange as a step toward greater international recognition. Foreigners can freely invest in Chinese companies in Hong Kong, where the markets are backed by a robust legal system.
Simon Galpin heads Invest Hong Kong, a government-funded investment promotion arm.
"If people want to do business in and with China Hong Kong is seen as a low-risk platform to access those opportunities," Galpin said.
During and after the Chinese civil war in the 1940s, Hong Kong became the refuge of tens of thousands of Chinese fleeing the conflict and the Communist take-over in 1949. Many started export industries in the city.
In the 1980s, Hong Kong factories moved to China's Guangdong province, and Hong Kong capital helped finance the development of the mainland's export manufacturing hub. Today, the flow of capital goes both ways.
Chinese wealth has benefited Hong Kong. Beijing's huge stimulus spending has been credited for lifting Hong Kong out of recession in the second quarter. Rich mainlanders are valued clients in the city's property market and at art auctions.
Some in the business community here warn that down the road, Shanghai could overtake Hong Kong as China's financial center. More foreign companies are setting up offices in Shanghai and the central government is pushing for the city to become another financial center.
David O'Rear, economist at the Hong Kong General Chamber of Commerce, says Hong Kong's legal system and the free flow of information in the territory will continue to be Hong Kong's strength.
"If China decides to favor Shanghai they would have to allow it to have the characteristics of Hong Kong?. So we have to start with free flow of information; that becomes very dangerous, it becomes uncontainable, so you have to have that throughout China," O'Rear said. "Then you have to have the rule of law. Well, if you have one set of legal standards and institutions in one place and no barrier and another set in another place, you're going to have legal arbitrage?. To impose them on Shanghai would be to change the whole of China, and if that happens Hong Kong is not going to be suffering, we're going to be having a wonderful time if China goes in the next 30 years as far as it gone in the last 30 years."
Despite some worries about its future, Hong Kong continues to get top marks from international business executives. In a recent survey by a conservative U.S. research organization, the Heritage Foundation, Hong Kong ranks as the world's freest economy - for the 15th consecutive year. China ranked 132nd.
Executives Say China's Economic Rise Bodes Well for Hong Kong
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