Is China threatening Asia's financial center? | CNBC Explains
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Is China threatening Asia's financial center? | CNBC Explains

The face of one of the world's biggest financial centers is changing fast. The banking scene here in Hong Kong has traditionally been populated by locals and expats. Now, mainland Chinese are coming for those same jobs. And succeeding. In the past decade, investment banks saw the largest increase in Chinese staff, compared to other sectors. 80% of firms saw at least a 20% increase in staff coming from the mainland. Even a typical expat pay package is changing. It used to include expensive perks like free housing, private school for kids and extensive time off. On average, Hong Kong expat packages are the 4th highest in Asia-Pacific after Japan, mainland China and India. But those expat pay packages are getting less cushy, with Hong Kong recently falling to a 5-year low. Hong Kong is known to be the investment banking capital of Asia. But slow growth has triggered a number of layoffs at global banks. And this is partially contributing to the exodus of expats here in the city. Just in the past year HSBC, Goldman Sachs, Deutsche Bank and Standard Chartered have announced a number of layoffs in their Hong Kong operations. All Western banks. And as mainland China positions itself to be more open to the world, it's actually putting Hong Kong's significance into question. After all, the population here of just about 7 million is minuscule compared to China's population of 1.3 billion. Western companies used to see Hong Kong as an entry point into the world's most populous country. But the question is increasingly being asked: Why set up your company right outside of mainland China, when instead you can just, maybe go into China? Of course, China has a number of restrictions on the amount of business foreign banks are allowed to do inside the mainland. And consequently, the rules are good for China's homegrown banks, like Bank of China which is expanding not only in Hong Kong, but aggressively abroad as well. Let's look at the signs pointing to this shift in Hong Kong's banking landscape. China's government is easing up on its regulations. It recently removed license requirements for foreign and joint-venture lenders in a number of financial services. And in January, China said it would open the country to foreign investment, including easing limits on investment in banks and other financial institutions. The moves are taking place as President Xi Jinping hopes to place China as the world leader in defending globalization and saying repeatedly he will keep the country wide open. Last year, the Shenzhen-Hong Kong Connect was launched which allow institutional investors to buy Shenzhen-listed stocks, which includes many prominent tech and consumer names. And in return, Chinese investors will have access to shares listed in Hong Kong. A similar model, the Shanghai-Hong Kong Stock Connect was launched in late 2014. Foreign investors are finding it easier than ever before to invest in the mainland. There's also been newly established free trade zones identified in both Shanghai and Shenzhen, which allows unprecedented economic freedoms, similar to what can happen in Hong Kong. The global financial system is starting to take China, not necessarily, Hong Kong, more seriously. Last year, China's currency, the Yuan, was added to the IMF's global basket of currencies, which are currencies deemed safe and reliable, joining the dollar, euro, yen and the pound. China has impacted many global assets lately ranging from Manhattan real estate to Australia's power grid. And now, the expansion by China's mainland banks could have a far greater impact than just Hong Kong.

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25 thoughts on “Is China threatening Asia's financial center? | CNBC Explains

  1. Dumbfuck chinese think that the host looks indian…hence indians are taking advantage of hong kong chaos and then their propaganda channel SCMP starts poverty shamming of India

  2. I love how China taking capitalism to a whole new level. While America is trying to make itself great by re implementing racism, sexism and American corporations are doing a great job at rediscovering new methods of modern slavery. Let's not forget America's favorite past time. Endless war.

  3. The CCP is shooting the Chinese govt, basically themselves, in the foot by marginalizing Hong Kong in the various ways it has deployed. The average Taiwan pro-unificationist sees just how wonderfully well the "One Country Two Systems" model is working and thinks hmmmmmmmmmm

  4. The CCP is shooting the Chinese govt, basically themselves, in the foot by marginalizing Hong Kong in the various ways it has deployed. The average Taiwan pro-unificationist sees just how wonderfully well the "One Country Two Systems" model is working and thinks hmmmmmmmmmm

  5. Hong Kong is falling now. Growing in Mainland Chinese Economy and Chinese opening to foreign investment will lead Hong Kong into a status which is relatively trivial in compare with its past.

  6. Lol Hong Kong used to think China as the poor, sad, communist, depressing country and now it's the other way around except the communist part cuz China is still communist. China is copying all the stuff in hk and now they've succeeded and treat hk unfairly

  7. 3:15 is a lie because in a previous video, you said the Australian government blocked the sale of its power grid to Chinese companies.

  8. Jeez. How did your camera man or anyone else not notice the zipper on your pants at 0:53 to 0:56. Really shoddy.

  9. The big comparative advantage of Hong Kong–a functioning legal system based on English common law that is transparent, fair and not corrupt. But the Beijing authorities are undermining this functional legal system, and have been doing it for the past decade or so. This may be the reason why major banks no longer see Hong Kong as a good place for business–if they're going to deal with Chinese corruption and a bad legal system, they may as well just pick up stakes and move to Shanghai.

  10. Southeast Asians hate them so much, they’re trying to conquer our Islands & Sea! Force us to make business & trading with them! Fuck you China!

  11. Hong Kong is part of China, I think US government threatened California financial independent recently Trump called California is renegade State,disregarding Federal government😊

  12. China threatening Hong Kong, which is part of China? So China is threatening China? Only the US is somehow capable and willing to threaten it’s domestic financial ecosystem. #911truth

  13. Hong Kong is no longer becoming a good place to do business. Lots of entrepreneurs have gone to Hong Kong due to low taxes and it's easy to open a business there. But now even Singapore and Cayman Islands seem like a better place especially when they are not controlled by China or any Communist government.

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