What China can do to Hong Kong after 2047

In light of the recent violence, deaths and prolonged protests in Hong Kong, the legal aspect of “One Country, Two Systems” will eventually favor China — but, can the long awaited victory over Hong Kong wait until 2047?

What happens to Hong Kong will largely depend on how China develops.

The baseline scenario is that China continues to develop itself and gets to around half to three-quarters of the per capita GDP of the United States (from about a quarter today) by the middle of the 21st century — on a relative basis, about where South Korea and Japan sit today. At that point it would be considered a “high income” country and it would have the largest economy in the world, ranging somewhere between 75% to 175% larger than the United States’ then 400 million-person economy.

In such a scenario, Hong Kong will almost certainly be fully integrated into the People’s Republic of China.

Hong Kong will lose its status as a SAR and probably be combined with Shenzhen, Guangzhou, Zhongshan, Zhuhai and Macau into a massive megalopolis that spans the entire Pearl River Delta. It will be administered like any Tier I Chinese city and have the same legal system as the rest of the country.

At some point, instead of “Hong Kong” outsiders will start referring to it more as the Chinese do — i.e. Xianggang or the “Guang-Shen-Gang-Ao” [1] megalopolis — just like people no longer refer to Beijing as “Peking” or “Beiping”.

In fact, some elements of the integration process have already begun. Recently, as my plane descended into Hong Kong International Airport over the Pearl River Delta, I was able to catch a glimpse and snap a picture of the nearly completed bridge spanning the Delta connecting Hong Kong to Zhuhai and Macau, Glenn Luk, who lived in China between 2001 – 2004 writes.

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As you can see it is almost done. ETA is 2018.

This may be troubling to some people. But before you panic, remember that China in 2047 is going to be very different from China today in 2016. Its economy, administrative institutions, legal system and heck maybe even its political system will evolve significantly over the next three decades. Just think about how much mainland China has changed since 1986. The long-term trend since the 1980s has been one of convergence and I expect that to continue.

Of course as the late great Yogi Berra once said, “It’s tough to make predictions, especially about the future.”” Anything can happen. We certainly cannot rule out a scenario where China gets stuck (or worse) like many others have in history. In the early 20th century, Argentina was one of the world’s wealthiest countries and today it is an economic basketcase. In the early 1990s, everybody here in America thought the Japanese were going to take over the world and that did not happen.

For instance, China could get stuck in the dreaded “middle income trap”. In fact, it is right now in the process of making the delicate transition from an export and investment-centric economy to a consumption-centric one. While before they could look to the Japanese or South Korean (or even Singaporean) economic playbook for guidance and inspiration, they are now heading into uncharted waters. They need to figure out how to turn their economy into something that looks a lot more like the United States, but without the benefit of “Manifest Destiny” and two centuries of time. I think there is a pretty good chance they will be able to do it but there’s also a non-zero chance of failure to worry about.

In such a scenario, China might not be quite ready to integrate Hong Kong by 2047. In this case they could simply continue “One Country, Two Systems” for a while longer or just say “F__ it” and push ahead anyway. Given how much the economy of Hong Kong relies on China, Beijing could very well go ahead and absorb Hong Kong at that point regardless of what scenario plays out.

Either way, this much I know, Glenn adds. “For better or worse, Hong Kong’s future is firmly tied to mainland China and it matters not one iota whether folks like it or not.”

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