A Paradigm Shift Towards a Green and Sustainable Finance Center

30 Paradigm Shift and the Shared Belief One may say that the predicament in Hong Kong’s economy can be understood as a result primarily caused by the competition between China and the West with China’s fast growth. The trade friction between China and the United States implies these two world powers’ mutual suspicions and rivalry for future leadership. Hong Kong is positioned as a transit trade port which makes it the first to be affected. In early 2020, Hong Kong experienced financial sanctions from the United States. The Anti-ELAB Movement further demonstrated a localized opposition between China and the West. The promulgation of the National Security Law later on and consequent Western countermeasures stood for open expressions of antagonism between China and the West. Then, there was the pandemic. All of these tensions brought pressure onto the city’s standpoint as a global financial center. Nevertheless, the fundamental challenge that the city is facing lies with the changing balance between Mainland Chinese and foreign capitals in Hong Kong. As the mainland capital and investors gradually take a more prominent role in Hong Kong, the Economist put forward the notion that “Hong Kong’s institutions face gradual decay and that it drifts away from being a globalized financial center towards one that is more Mainland Chinese”. Worries come from the convergence of Hong Kong and other Mainland Chinese financial centers. The decline of international investors and capital may lead to Hong Kong being overtaken or replaced by other Asian financial centers or even by rising Mainland Chinese financial centers. Concepts such as Mainlandization or Sinicization are used to conceptualize the result from the series of incidents over the period between 2018 and 2022. The core of the “GBA 2.0” idea is aligned with such conceptualization. In essence, they see Hong Kong becoming increasingly similar to other Chinese Mainland cities, rather than being a special place with a system and characteristics which are unique. Hong Kong’s standing as a renowned IFC is well-known. The definition of IFC has evolved from emphasizing its facilitating role in the capital market to paying attention to the main functions that the center provides in the economic system. In the post-COVID recovery era, digital innovation and inclusivity have been placed as high priorities for future IFCs. This gradual evolution does not alter the nature of an IFC which is a pivotal place with intense concentration in a wide variety of decision-making areas related to finance and transactions of commodity capital. 4.1 Historical Pathway to an IFC Hong Kong’s pathway to an IFC is deeply rooted in its colonial past. With the arrival of British trading firms in the 1840s, other foreign companies and prominent Chinese trading firms followed. In 1865, the establishment of the Hongkong and Shanghai Bank (HSBC) marked the ratification of Hong Kong’s pivotal role in the networks for Asian individuals, firms, organizations and capital. The HSBC was organized by leading trading firms and supplied links to all of the key economies of Asia, Latin America, North America, and Europe. The creation of the HSBC enabled these firms to develop banking branches through the network and provide financial services. With the exchange of trade and finance expertise in the city, the initial agglomeration of trading firms quickly turned into an attraction for highly specialized and capitalized decision makers. This consequently made the city a business center with control over the exchange of capital, reaching into most Asian countries and other regions of the world economy.