China’s Premiers have lavished praise on Hong Kong’s “irreplaceable” contribution to the nation’s economic success. Yet, the more general view is that Hong Kong is unenthusiastic about Mainland business opportunities.

This presentation begins with an analysis of China’s dividends from Hong Kong’s open, capitalist, free-market economy. In the “Cold War”, it was China’s major source of foreign currency. After Deng Xiaoping’s reforms, it supplied the largest share of FDI. Currently, it leads the drive to globalise the RMB. Hong Kong has had no rivals because reforms of the Mainland’s financial system have lagged behind the rest of the economy.

Hong Kong has been permitted a far more restricted role in China’s domestic economy. The current and the previous Chief Executives have complained of hostility from local governments determined to protect their own business interests. Despite national leaders’ campaigns to strengthen the market’s role, local officials have refused to leave the “socialist” economy at the mercy of Hong Kong’s capitalist competition.