Merge Hong Kong and Shenzhen in 2047 for a stronger economy
Keith Hui says Beijing should consider such a merger, as it would provide the financial support needed for its One Belt, One Road vision amid a slower pace of renminbi internationalisation

Come 2047, what will happen to Hong Kong? In recent years, talk about the city’s post-2047 future has intensified as its relations with the mainland grow strained over a number of issues. Most agree it is time for debate on what will happen to “one country, two systems” after 50 years.
From an economic point of view, I suggest the Beijing government consider merging Hong Kong and Shenzhen.
It is Beijing’s ideal plan to operate two offshore renminbi clearing centres – London and Hong Kong – with a view to turning the renminbi into a fully convertible currency, which involves liberalising China’s capital account. However, in the wake of two recent events, China may have to postpone such a plan at least until 2100.
Pace of renminbi internationalisation slows amid shifting political, economic dynamics
First, in a move that shocked in June, the International Monetary Fund apparently reversed its long-standing opinion on an open capital account. Since its establishment, the IMF has always urged economies to open up their capital accounts for investments and loans, but in a recently published paper, “Neoliberalism: Oversold?”, it admitted that such liberalisation has brought developing countries “the pervasiveness of booms and busts” rather than growth. “In addition to raising the odds of a crash, financial openness has distributional effects, appreciably raising inequality... There is now strong evidence that inequality can significantly lower both the level and sustainability of growth”, it said. As a Foreign Policy analyst put it, this assessment was a “political bombshell… that caused a near-panic among advocates of free market policies”.
As steady and balanced growth is China’s prime goal, there is now a lack of both ideological and practical justifications for a quick renminbi marketisation.
Does Brexit also mean an exit for renminbi trading from London?
Brexit is the second event. In light of Britain’s inevitably diminishing global connectivity and influence, Chinese scholars have suggested moving the renminbi clearing centre from London to Frankfurt or Brussels. But this won’t help, since the latter cities are much weaker in financial accessibility. Furthermore, the future of the European Union and the euro are vulnerable to deformation or even disintegration.