Taking the actual negative GDP growth as the indicator for two consecutive quarters, Hong Kong has experienced three economic recessions since the reunification
The first was from the first quarter of 1998 to the first quarter of 1999, the second was from the third quarter of 2001 to the first quarter of 2002, and the third was the first quarter of 2009 to the third quarter. The second can be regarded as the first aftermath. The source is the Asian financial crisis that began on July 2, 1997. It is the second in terms of the magnitude of the decline in GDP, the length of time, and the unemployment rate. The worst since the end of the war. The third source is the “100-year-old” financial crisis in the United States in 2008. In the three economic recessions, the stock market and real estate market fell first due to external influences, followed by a decline in local consumption and a shrinking activity in other industries or industries.
Riot trade war hits Hong Kong inside and outside
Right now, Hong Kong has entered its fourth economic recession since the reunification. GDP has contracted since the second quarter of 2019, and it remains to be seen when it will bottom out. However, based on the following, I assert that the current recession is unprecedented and will be more severe than the previous three recessions.
First, although the source is also an external factor, it is not as it is now
The Asian financial crisis was caused by structural problems in emerging economies and emerging financial markets. At that time, the US-led global financial, economic, and political landscape was still intoxicated by the so-called “end of history.” The Asian financial crisis lasted for about a year and a half. The serious impact on Hong Kong was because Hong Kong was in the storm zone of the Asian financial crisis.
The U.S. financial crisis is a sign that the U.S.-led global structure is beginning to experience a crisis. However, the United States still focuses on anti-terrorism as its global strategy, and the United States’ basic policy toward China is still both contact and containment.
The source of the current economic downturn in Hong Kong is that the United States has launched a trade war against China, which is a manifestation of the United States’ view of China as its main rival. When the United States suffered a financial crisis, Hong Kong was not in a storm zone. However, the United States has comprehensively curbed China, and Hong Kong as part of China cannot be avoided.
Second, the internal factors are not the same now
During the first three economic recessions, Hong Kong’s basic political contradictions were either not exposed or moderated, and the political situation was stable. At present, the deepening of the economic recession is largely due to the evolution of the “anti-revision law” into a “black revolution”; the fundamental contradictions of Hong Kong politics have intensified unprecedentedly, and socio-political divisions have never been worse. difficult. The Sino-US trade war is the external economic and political cause of Hong Kong’s economic downturn in 2019. The “black revolution” that has lasted for more than half a year is the political cause of Hong Kong’s economic downturn in 2019. Both are unprecedented in the first three recessions.
Third, the path to this recession is special
The first three recessions were the first major declines in the stock and real estate markets. When Hong Kong’s GDP began to fall in the second quarter of 2019, the stock market and real estate market were still on the rise. In the first half of 2019, measured by the Central Plains Real Estate Index, private house prices in Hong Kong rose by about 12%, following a 12.8% increase in 2017.
At the end of 2019, Hong Kong’s GDP has fallen for three consecutive quarters, but the Hang Seng Index has returned to 28,000 points. This recession was caused by a decline in foreign trade and local consumption. However, the property market has declined in the second half of 2019. There is considerable uncertainty as to whether the stock market can maintain its upward trend in 2020. Generally speaking, the stock market will reflect the macroeconomic recession even if it does not act as the weather vane of the macroeconomic recession. In other words, once the Hong Kong stock market and the real estate market decline together in 2020, the overall economic recession is bound to worsen sharply.
Trigger the capital structure of countries in Hong Kong
Fourth, the relationship with the Mainland is different
During the first three economic recessions, Hong Kong had a good relationship with the Mainland and received strong support from the Mainland economy. The “Black Revolution” has unprecedentedly badly damaged the relationship between Hong Kong and the Mainland. The rise of separatism in Hong Kong has created an insurmountable obstacle for Hong Kong’s participation in the construction of the Guangdong-Hong Kong-Macao Greater Bay Area.
Fifth, the areas involved in this economic downturn are complex
The previous two economic recessions have revealed deep problems in Hong Kong’s economic structure that need to be addressed. The third economic recession prompted the third government of the SAR to pay attention to the need for Hong Kong to expand new industries or new industries. This economic downturn not only fully exposed Hong Kong’s expansion of new industries or new industries over the years, but it still relied too much on traditional land industries, and began to trigger adjustments in the capital structure.