Hong Kong has been trying to speed up its transition into a knowledge-based economy for nearly 20 years. It has been a struggle, to say the least.
The 11th G-20 summit began on Sept 4 in Hangzhou, the capital city of Zhejiang province. On the same day, the Hong Kong Special Administrative Region held the 2016 Legislative Council (Legco) election.
The timing of the two events may be a coincidence, but together they can help us better understand why Hong Kong must resolve two pressing issues soon.
The inaugural summit of G-20 member states was held in Washington, DC in October 2008. President Xi Jinping noted in his opening speech at this year's G-20 summit that the world economy is again at a critical juncture. He explained that several negative factors together are making it difficult for the global economy to raise growth rates. This is because there is not enough market demand, so financial markets remain turbulent and international trade and investment is lacklustre, to name just a few problems.
Under the theme of "Building an innovative, invigorating, integrated and inclusive world economy", the Hangzhou G-20 summit included in its main topics "innovative growth pattern", a first in its history.
Innovation will bring the world economy out of its current bind - particularly in science and technology, and nation-specific economic systems and growth patterns. It will also help facilitate reform of global economic governance.
Hong Kong's bid to transform into a knowledge-based economy over the past 20 years has been a struggle.
The main obstacles are worsening political conflicts and resistance by vested-interest groups. They prevent innovation in science and technology, systems from moving forward and new industries from taking shape. As a result, the city's economic growth remains overly dependent on the real estate industry.
Hong Kong is in urgent need of an innovative growth pattern, but the expanded opposition camp in the sixth-term Legco and a divided society threaten to stall any efforts to build a knowledge-based economy with an innovative growth pattern.
In the meantime, as a small but very open economy, Hong Kong cannot afford to overlook the ongoing global economic governance reform. Just a week before the G-20 Summit in Hangzhou opened, German Vice-Chancellor and Minister for Economic Affairs and Energy Sigmar Gabriel declared that the negotiations between the European Union and the United States over the Transatlantic Trade and Investment Partnership (TTIP) had failed.
The TTIP negotiations began in 2013 and were scheduled to conclude this year. Three years and 14 rounds of talks later, however, all parties concerned have failed to reach consensus on any of the issues and remain in protracted disputes over matters such as investment protection, government purchasing, origin of product labelling and lowering tariffs on agricultural products.
Taking the helm in the TTIP and the Trans-Pacific Partnership (TPP) talks is part of the US strategy to control global governance reform in the 21st century. But its domestic politics is such that the TPP stands no chance of winning congressional approval. If it dies of a miscarriage, that would also ring the bell for the aforementioned 21st-century strategy of the US government.
The implications for and impact on China, including Hong Kong, would be a "double-edged sword".
The failure of the TPP and TTIP to materialise means the US won't be able to dominate the global economic governance reform process, allowing such efforts to proceed in a fairer and more reasonable manner.
On the other hand, this may also lead to more trade disputes with its major trading partners, especially China. There is no way for Hong Kong to avoid being found "guilty by association".
Hong Kong must recognise its place in the world economy amid the reform of global economic governance and adjust its development strategy accordingly. To do this, it must accept that it is an inseparable part of China.
CHINA DAILY/ASIA NEWS NETWORK
• The author is a senior research fellow of China Everbright Holdings.
A version of this article appeared in the print edition of The Straits Times on September 21, 2016, with the headline 'Two pressing issues Hong Kong must address'. Print Edition | Subscribe
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