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In search of the New Normal Positioning HK in the global context NICHOLAS KWAN

DIRECTOR OF RESEARCH

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Where are we?

Global De-Globalisation

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Dampened financial flows

Source: The Economist

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US$bn

0

0.5

1

1.5

2

2.5

3

3.5

4

% of world imports

300

% 800

700

600

500

400

200

100

0

US$bn

Rising trade protectionism

Source: WTO, Report on G20 trade measures, 17 June 2013, p.4

Imports of G20 covered by restrictive measures since 2010

Oct-10 Apr-11 Oct-11 May-12 Oct-12 May-13

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Economic and Monetary Union (CSME/EC$, EU/€)

Economic union (CSME, EU)

Customs and Monetary Union (CEMAC/franc, UEMOA/franc)

Common market (EEA, EFTA, CES)

Customs union (CAN, CUBKR, EAC, EUCU, MERCOSUR, SACU)

Multilateral Free Trade Area (AFTA, CEFTA, CISFTA, COMESA, GAFTA, GCC,

NAFTA, SAFTA, SICA, TPP)

Coloured according to the highest form of economic union Source: http://en.wikipedia.org/wiki/Free_trade_area

Fragmented world

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Great threats

Source: Google

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Great expectation

Source: Google

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Speed has limits

Source: Google

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Same as the sky

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So do resources

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The New Normal?

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Source: Google

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A New World Order

Source: Google

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Needs a new financial architecture

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A new trade regime

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New technology

New frontiers

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A new growth strategy

Source: Google

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Hong Kong’s responses

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Grow beyond borders

18.6 18.1

30.5 34.2

39.2

50.5 50.7 58.2

65.0

45.6

59.8

58.0 56.3

52.8

45.0 42.7

40.8 33.9 35.8

22.1

11.5 9.5 8.0 4.6 6.7

1.0 1.1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1988 1991 1994 1997 2000 2003 2006 2009 2012

Domestic exports

Re-exports

Offshore trade

Adjust and adapt

Sourcing => Marketing

Manufacturing =>

Services/Trade

Bringing-in => Going-out

Hardware => Software

Financial capital, human

capital => Institutional social capital

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Change with time

Primary 1%

Manufacturing, Util ities

and

Constructions

30%

Wholesale, Retail, Import,

Export, Restaurant,

Hotel 20%

Transport, Storage and Communicat

ion 7%

Financing, Insurance, Real Estate

& Business Service

22%

Community, Social and Personal

Services 12%

Other Services

8%

1980

Primary 0%

Manufacturing, Util ities

and

Constructions 7%

Wholesale, Retail, Import,

Export, Restaurant,

Hotel 27%

Transport, Storage and

Communicati

on 11%

Financing, Insurance,

Real Estate &

Business Service

27%

Community, Social and Personal

Services 17%

Other Services

11%

2010

Transformation of Hong Kong’s economic structure

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In search of the New Normal

Thanks

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