Will Hong Kong Remain the Jurisdiction of Choice for Offshor

In the midst of the general unrest in Hong Kong, the issue on everyone's minds right now is 'does China really need Hong Kong as a financial centre?' As Hong Kong enters its first recession in a decade, using the globalisation of finance and rising Chinese charge of Hong Kong's banking industry, Hong Kong's role will probably change.

Hong Kong happens to be viewed as having the world's freest economy using its simple and low tax system, trade freedom, monetary freedom and government integrity. Hong Kong's status happens to be protected by its ease of doing business, it's unique role between China and also the rest of the world and the rule of law. But when it loses its status as one of Asia's top financial centres, it could be disastrous.

Last month, the IMF released a study which reinforced its assessment of Hong Kong's economic and financial positions, affirming Hong Kong's position as a global financial centre and regional trading hub and among the most open economies in the world. This came following the Hong Kong government confirmed it had entered its first recession for any decade, with the economy shrinking 3.2% from July – September 2021. There is no insufficient competition for financial centres, and investors can certainly turn to other cities for example Singapore, Tokyo and Shanghai.

Unsurprisingly, safety fears will also be prompting the ultra-wealthy to consider other jurisdictions when it comes to offshore banking and asset protection. Based on an estimate from Goldman Sachs Group Inc, the possibility benefit to Singapore in the turmoil in Hong Kong is up to US$4 billion. This represents top of the estimate from the money investors have already moved to Singapore amid escalating political protests. Nevertheless there is no definitive answer as yet, to what will happen to Hong Kong as a financial centre, it's economic climate is still holding up against weeks of unprecedented public unrest.