From Hong Kong to Xiānggǎng

Hong Kong deserves great credit for fighting back. In the nearly two and a half years since I expressed the seemingly audacious opinion in the Financial Times that Hong Kong may be over, the city’s supporters have orchestrated a determined campaign to prove me wrong.

On the surface, this heroic defence appears to have considerable merit. The economy has been relatively resilient, and a resurgence of the stock market has erased memories of the 2018-20 collapse associated with political turmoil. Moreover, Hong Kong has reclaimed its former position of global IPO leadership, giving it bragging rights as Asia’s premier financial centre. “Hong Kong is back,” proclaims Financial Secretary Paul Chan and other leading government officials.

Beneath the surface, however, a very different story has emerged. The pre-2019 Hong Kong of yesteryear is gone. Beijing’s hostile takeover following the pro-democracy demonstrations of 2019-20, has transformed Hong Kong into just another big Chinese city. Its Mandarin name Xiānggǎng (香港: fragrant harbour), which celebrates its pre-colonial Chinese heritage, now seems far more appropriate than the Cantonese nomenclature of Hong Kong.

Hong Kong or Xiānggǎng?

This dramatic transformation back into Xiānggǎng is the real story of Hong Kong — in terms of the city’s capital raising function, the rule of law, freedom of the press, the composition of the workforce, and the language of daily life. Hong Kong’s defenders are in denial about this new chameleon-like identity, viewing it instead as yet another example of its inherent resilience. Nothing could be further from the truth.

IPO leadership, long cherished as the most precious jewel in the crown of financial services, is a glaring case in point. Finance-centric Hong Kong has always put great emphasis on its global rankings in capital raising for new companies, especially when compared with other major financial centres in larger cities such as New York, London, Tokyo, and even Mumbai. It turns out, however, that Hong Kong’s most recent IPO underwriting ascendancy back to #1 in 2025 and early 2026 was dominated by Mainland Chinese listings; by one estimate, they account for as much as 90% to 95% of recent funds raised, including Chinese companies like CATL, Luxshare Precision, Z.ai (Zhipu AI), Momenta, and Montage Technology. Reflecting deliberate support from Beijing, Hong Kong is now less a thriving global IPO market than China’s principal international fundraising platform.

The rule of law, long believed to be one of Hong Kong’s greatest institutional advantages, has been severely compromised in the years following the pro-democracy demonstrations of 2019-20. China’s imposition of its own National Security Law in June 2020, followed in 2024 by a middle-of-the-night enactment of Hong Kong’s Article 23 version of a domestic security framework, has stifled free and open debate, resulted in new arrests and harsh sentences for previously imprisoned activists, led to closures of independent bookstores, and resulted in the elimination of any semblance of a free press.

Moreover, five of Hong Kong’s foreign judges have resigned from the Court of Final Appeals, drawing the autonomy of the city’s highest court into serious question; departures include Lord Jonathan Sumption, one of England’s most brilliant jurists, who warned in the Financial Times of a Beijing strain of “judicial patriotism” that was poisoning the city’s judicial system.

While the city’s overall population has held steady at about 7.5 million since 2020, there has been a dramatic shift in the composition of Hong Kong’s workforce — reflecting the sharp departure of expats in 2021-22 following the protests, and the rapid influx of mainland immigrants from 2023. While the Hong Kong government does not publish official emigration statistics by nationality, most research points to an outflow of Western expatriates of between 80,000 to 120,000 since 2020 — down between 20% and 30% from pre-2020 highs and concentrated in industries such as finance, corporate law, accounting and consulting, media, regional headquarters of multinational corporations, and NGOs and policy organisations. Walking the streets of Hong Kong, today you are more likely to hear Mandarin than Cantonese, a dramatic shift in the tone of the city from its pre-2020 past.

All this points to a seismic transformation in the character of Hong Kong. The city is not “over” in the physical sense of its stunning outward appearance. Moreover, the pro-Beijing government has made a determined effort to spin a tale of resilience and competitive innovation. But without the direct intervention of PRC authorities, this tale would ring hollow.

China’s major stock market stimulus of September 2024 propelled both Mainland equities and the Hang Seng upward, unleashing a torrent of IPOs that Beijing consciously steered into Hong Kong’s relatively sophisticated equity distribution platform. Xi Jinping and Donald Trump’s determined efforts at short-term rapprochement have taken the negative impacts of the US-China conflict off the table for the moment. And the stability of a still sluggish Chinese economy has put a floor on Hong Kong’s relatively subdued GDP growth. However, until there is a meaningful test of the downside — for the economy or the equity market — any conclusions on the special resilience of Hong Kong are premature.

I have become the lightning rod in the “Hong Kong is over” debate. Without naming names, Hong Kong government officials have been quick to pounce on my arguments in almost Trumpian style, and their sympathetic counterparts in Beijing have piled on, by stifling my freedom of expression in China. I am constantly inundated with requests from news reporters and other media outlets to atone for my sins and admit that I was wrong.

As I have marked my views to market over the past two and a half years — conceding that a managed stock market has risen more than I had expected (yet remains about 20% below its February 2021 highs) — many locals have incorrectly characterised this as an apology or a concession. Just the other day, I received the following query from a leading (again unnamed) journalist: “‘Hong Kong is over’ seems over. What would you say about it?” Well, let me make it crystal clear as to what I say about it: the Hong Kong of old is over. Go to Xiānggǎng and see for yourself.

This article was first published in Conflict, a Substack publication by Stephen Roach, as “From Hong Kong to Xiānggǎng”.

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