A Paradigm Shift Towards a Green and Sustainable Finance Center

37 Hong Kong in Transition: A Paradigm Shift Towards a Green and Sustainable Finance Center In this research, we have looked into Hong Kong’s recent economic downturn and the structural changes of its financial market. Our analysis has shown that the structural changes have affected the balance underpinning Hong Kong’s status as an IFC, thus providing the basis to reject the plans of making the SAR part of a unified GBA and rejuvenating the city as an IFC. Alternatively, we argue that Hong Kong’s transformation to a leading green and sustainable finance center is necessary and also feasible. It serves as a rescue measure to sustain the city’s advantages connecting China and the West and thus a strategic approach to realize the mission “from governance to greater prosperity”. It is not a simple follow-up measure but a decision that is based on a worldwide shared belief and functions to preserve the city’s unique hybrid identity. Thus, it is of overall strategic significance for the city. In retrospect, Hong Kong’s prosperity heavily depends on the connectivity between China and the West. Chinese and Western civilizations have been coexisting in the city for centuries and the two groups of cultures blend into a unique Hong Kong style. At this intersection, its market rules, legal system, economic values and social norms gradually take shape, creating the Pearl of the Orient. The recent economic downturn in Hong Kong presented a grand challenge for the city, touching the fundamental basis that supports the city. The Hong Kong Government should be persistent about this strategic positioning and elucidate it in the SAR’s long-term development plan. On this basis, the Government will set the goals and plans for Hong Kong’s transformation into a green and sustainable finance center. We recommend that the Hong Kong Government seizes the opportunities of green transformation in Mainland China and the world and integrates deeply into the green development of the Greater Bay Area, providing strong financial support for the green development of Asia and the Belt and Road region. To do so, we recommend the government make it clear to the whole society that green and sustainable finance is the core strategic direction of Hong Kong’s future development. Then, the Hong Kong Government should update its development plan at the level of the special administrative region and promote a transition plan. This plan should outline an architecture for Hong Kong’s green and sustainable finance system, including short, medium and long-term goals and cooperating roles of different stakeholders. It should envision an ideal market with services to be provided. In terms of the actual market development, the Hong Kong Government should continue its work in taxonomy and consider Hong Kong’s utility in catering to the demands from the EU, the Belt and Road and the Greater Bay Area and other regions. An important precondition for the global green transformation is to have open cross-regional cooperation. We must firmly uphold multilateralism and be a leader in thought and an example of win-win collaboration. Hong Kong is one of the most open economies in the world, a model of multilateralism. The global green transformation requires not only Hong Kong’s participation, but also its commitment to multilateralism and leadership in open cooperation. In the coming decades, Hong Kong must seize the historical opportunity of green transformation in China and the world and build itself into a platform that integrates the shared beliefs in China and the West for green development.