When discussing Hong Kong’s and Singapore’s comparative advantages, pundits have often framed the narrative in Dickensian terms as “a tale of two cities”.
Both economies are vibrant financial, trading and shipping hubs, and are in direct competition in many areas. Yet it would be delusional to hold Singapore up as Hong Kong’s chief rival.
The supposed competition to attract touring pop stars and family offices distracts from fundamental differences in the structure and outlook of the two economies.
Singapore has long embraced industrial policy and has maintained manufacturing as a sizeable component of its gross domestic product. Hong Kong is a predominantly service economy and is highly integrated with the mainland Chinese economy.
For Hong Kong to broaden its economic outlook and become a global centre for technology and innovation, the city must look to Shenzhen and other Chinese tech hubs that can transfer talent and technology while pursuing joint research and development initiatives.
Mainland cities like Shenzhen are not just Hong Kong’s tutors in technology development. They also compete with Hong Kong’s service sector. Since mainland China lifted Covid-19 controls, the astonishing improvement of its service economy has revealed some of Hong Kong’s weaknesses.
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