Hong Kong: Would a failure to allow democratic reforms hurt its standing as a business hub?

Thousands of pro-democracy protesters have staged demonstrations known as "Occupy Central"

Nathan Gamester, programme director at the Legatum Institute, says Yes.

It pays to be a democracy. Hong Kong’s protesters know this, which is why they are digging in despite violent clashes with the police and strong condemnation from Beijing’s central authorities.

Some may point to China as a country that has been successful without democracy. Yes, China has shown strong economic growth in recent years. But when we look beyond the growth figures, we see that it is far from a prosperous country in many other ways.

In our global Prosperity Index last year, China was ranked number 51 overall (out of 142), behind countries such as Brazil, Estonia and Poland. The Prosperity Index shows that 27 of the top 30 most prosperous countries in the world today are democracies.

Put another way, democracy and prosperity go hand-in-hand. The people of Hong Kong are seeking the right to determine their own future, to secure future prosperity. China should listen.

Guy Foster, group head of research at Brewin Dolphin, says No.

Hong Kong’s role as a world trade hub is entrenched for now. Despite having fallen behind Shanghai in physical trade, it is streets ahead as a financial centre. Strategically, Hong Kong will remain important for both physical and financial trade, as it faces west towards the demographic riches of India and Africa.

Grumbles within Hong Kong concern not just democracy and political change, but also the unaffordable property market, which has seen prices quadruple and rents more than double over the last decade. With Hong Kong’s monetary policy tied to that of the US, the tailwind for property looks set to reverse.

From the Chinese authorities’ perspective, succumbing to pro-democracy protests would set a destabilising precedent for the mainland. But having spent 25 years shedding an image of heavy-handedness, they will tread carefully.

The protesters will be happy to have made a superpower take note of their objections, but neither side will favour escalation.

Related articles