Stephen Roach does a U-turn on his views on Hong Kong

Mark Pinkstone/Former Chief Information Officer of HK government

Morgan Stanley’s former Asian chairman Stephen Roach, who last year infamously forecasted the death of Hong Kong, has changed his tune and now says Hong Kong is the driving force behind China’s economy.

It is far from over and Roach says that if he had to rewrite a piece on Hong Kong it would be that Hong Kong is experiencing a revival because of its Chinese characteristics, not in spite of it.

The admission by Roach is commendable in that he has admitted the error of his ways. But Roach is a businessman and a financier, not a politician. The lawmakers in the hallowed halls of congress and the senate remain in denial that Hong Kong is progressively moving forward and is a world player in the global economy, despite its size. They remain defiant in acknowledging the fact that our legal system is the same as theirs with an added benefit of bringing in foreign judges to ensure fairness of trials. But they are politicians, so admitting the truth is not on their agenda.

Roach has had a rethink about what he said last year, spurred on by the rift between US President Donald Trump and China and the role played by Hong Kong in combatting Trump’s bullying tactics. The city’s emergence as a bulwark against hostile US actions is strengthening the outlook for Hong Kong.

But Roach, being a typical American, still has a dig at Hong Kong’s national security law, which is very similar to the state and federal security laws of the US.

The city is being caught in the middle of the US and China rivalry, says Roach and Beijing’s intervention in the shape of a national security law is undermining Hong Kong’s political autonomy. These two elements continue to be concerns, according to Roach, who said Hong Kong is “now in China’s orbit completely from an economic, administrative and legal point of view.”

He added that the US-China conflict was more of an opportunity for Hong Kong than a threat.

“Hong Kong’s financial success may be determined more by its ties to China, and the impact that US pressures have had on forcing something closer to a full-blown financial decoupling between the US and China,” said Roach. “Hong Kong is in a position to benefit from that.”

Whether or not there is a financial decoupling with the US in the near future remains to be seen. But Hong Kong has always benefitted from its position in China.

The economist also believes that the conflict between the US and China is getting worse. “And Hong Kong — rather than getting hammered in the crossfire as I expected and wrote — may be benefiting from that, because of its unique position as China’s most important window to international finance,” he told Bloomberg.

Bloomberg also noticed in its report that the Hang Seng Index has rallied 16 per cent, outpacing the S&P 500, in which has little has changed. Share listings have raised HK$77 billion ($9.9 billion) in Hong Kong this year through May, the most since 2021, led by Contemporary Amperex Technology Co. — better known as CATL – Roach’s original thesis for Hong Kong’s demise which he maintained throughout 2024.

In February last year, Roach wrote in the Financial Times that “Hong Kong is now over,” citing a sluggish stock market performance. He said “the wheels had come off” in 2019-20 when there were “massive pro-democracy demonstrations” against the proposed extradition bill and the introduction of the national security laws. He claimed that “the 50-year transition period to full takeover by the People’s Republic of China had been effectively cut in half.”

This, of course drew strong rebuttals from officials and politicians in Hong Kong and Beijing. But throughout the year Roach continued his rhetoric that Hong Kong was doomed.

It was the bullying tactics of Trump who changed his mind. First the trade sanctions, followed by sanctions on Hong Kong’s senior officials, then stripping Hong Kong of its special status that allowed it to be treated separately from China and then the scrapping of visas for students attending Harvard University.

Bloomberg noted that it’s not just in finance that Hong Kong may increase its edge. Policies by US President Donald Trump such as revoking visas for Chinese students and his assault on elite colleges such as Harvard may also drive human capital towards the city.

To which he responded, “Our loss is your gain,” he said of Hong Kong.

Mark Pinkstone

** The blog article is the sole responsibility of the author and does not represent the position of our company. **

Washington-based Foreign Policy magazine has been quick to point out that the Wang Fuk Court fire confirmed that the city’s “once prized freedom have vanished.”

How the magazine in it’s December 2 edition came to this conclusion is anyone’s guess, but it is indicative that anything untoward in Hong Kong is seen as politically motivated and a bad thing.

The fire, a great tragedy in Hong Kong that claimed 159 lives and many still missing, has left the city in mourning. And yet, the American press continues to use the opportunity to lambast Hong Kong as it struggles to come to terms with the devastating tragedy. It is a time for sympathies, not political gain… but that is the American way.

Foreign Policy editor James Palmer said local authorities responded to the fire by stifling civil society aid efforts and detaining critics. According to Palmer, since the 2019 protests and the imposition of “draconian” national security laws, no public institution in Hong Kong can operate freely. “Democratic mechanisms have been gutted, and political candidates must now adhere explicitly to Beijing’s line. The city’s response to the fire has confirmed Hong Kongers’ fears that the city’s political culture is now indistinguishable from that of the mainland,” he wrote.

Such comments are coming from a magazine that is popular in the halls of the US Congress and Senate. This and other foreign news coverage of the fire, prompted the Hong Kong SAR government to issue a statement that external forces were making false and defamatory remarks about the government’s post-disaster follow-up and investigations, as well as stirring up trouble and maliciously attacking the disaster relief efforts, as they “harbour malicious intent”. The Office for Safeguarding National Security also condemned a “small clique of external hostile forces” for “stirring up trouble and taking advantage of the chaos.”

One woman has been arrested over a fake donation website for the Tai Po fire victims and others have been detained for making false claims about the victims whom they claimed were “harbouring grave sins” and “got their retribution.” Others have been questioned by police for unbecoming behaviour towards the victims.

But Palmer writes Police dismantled grassroots fundraising efforts and donation sites and replaced them with state-approved efforts. So says somebody more than 13,000 kilometres away.

Hong Kong people responded in their usual fashion, with compassion and within a short period some HK$1 billion had been raised for the victims. Food, clothing and blankets were also donated by a caring public.

What Palmer means is again anybody’s guess. If he is referring to Beijing, he is sadly mistaken. All efforts relating to the fire were Hong Kong’s efforts. Beijing did offer to help and had fire tenders on the ready at the Shenzhen boundary.

Chinese President Xi Jingping offered his condolences on behalf of all the Chinese people indicating the care the central authorities in Beijing have towards Hong Kong.

The city’s response to the fire was remarkable as more than 2,300 firefighters and medical personnel were involved in the operation, which included one firefighter killed and 12 others injured.

It is writers like Palmer who give Hong Kong a bad name for the sole purpose of sensationalism and political sway. But, unfortunately, their publications are read as 丶being authoritative in the corridors of power and impact on Sino-Anglo relations, an never ending frustrating situation.