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Economist Stephen Roach’s evolving perspective on Hong Kong’s economic trajectory

American economist Stephen Roach’s evolving perspective on Hong Kong’s economic trajectory offers a compelling case study in how geopolitical and financial dynamics can defy initial pessimistic forecasts. Here are the key takeaways from his reassessment and Hong Kong’s recent performance:

1. Why Roach Revised His Outlook:

Initial Concerns: Stephen Roach published an opinion piece in the Financial Times in February 2024 titled “It pains me to say Hong Kong is over.” —Hong Kong’s deepening integration with a slowing mainland economy, potential erosion of Western financial ties, and U.S.-China tensions. These were reasonable concerns shared by many analysts.

Shift to Optimism (2025): His revised view acknowledges Hong Kong’s adaptive resilience, particularly its role as China’s financial “pressure valve.” As U.S.-China decoupling accelerates, Hong Kong has become a critical conduit for Chinese firms accessing global capital (e.g., via IPOs) and for foreign investors entering mainland markets (via Stock Connect programs). This unique positioning offsets some downsides of geopolitical friction.

2. Market Performance Validates the Rebound:

Hang Seng Index Surge: A 45% rebound (even with periodic volatility) suggests investor confidence persists despite headwinds. The rapid recovery after April 2025’s drop indicates underlying liquidity and institutional support.

IPO Dominance: Surpassing New York in fundraising (HK$76 billion YTD) reflects Hong Kong’s enduring appeal as a listing hub, especially for mainland tech and green-energy firms sidelined from U.S. markets by geopolitical scrutiny.

3. Hong Kong’s Structural Advantages Endure:

Rule of Law & Institutions: Despite political changes, Hong Kong’s legal framework and financial infrastructure remain distinct from mainland China’s, attracting multinationals.

Gateway Role: As China’s capital controls tighten, Hong Kong’s semi-convertible currency and free-flowing capital markets are irreplaceable for cross-border transactions.

Diversification: The city is pivoting toward new growth drivers (wealth management, green finance, offshore RMB trading) to offset traditional sectors like real estate.

4. Lingering Risks Roach Might Be Underweighting:

Geopolitical Wildcards: U.S. secondary sanctions targeting Hong Kong-linked entities could disrupt financial flows.

Mainland Contagion: A prolonged property crisis or deflation in China could spill over into Hong Kong’s asset markets.

Talent Drain: Ongoing emigration of professionals (though offset partially by mainland talent inflows) may erode long-term competitiveness.

5. Broader Implications:

Roach’s reversal underscores that Hong Kong’s fate isn’t binary (“over” or “thriving”) but hinges on its ability to leverage hybridity—bridging Chinese capital and global markets while navigating geopolitical tensions. The city’s resurgence aligns with Beijing’s strategic need for a controlled financial portal to the world, even as it tightens domestic oversight.

Conclusion:

While risks remain, Hong Kong’s recent performance suggests it’s premature to write its obituary. Its resilience lies in institutional strengths and irreplaceable functions within China’s financial system—factors Roach initially underestimated. However, his original warnings about overreliance on mainland integration and geopolitical fragility remain relevant as cautionary notes. The city’s future will depend on balancing these dualities. https://www.facebook.com/jeff.mah.5/videos/2132377200608037/?__cft__[0]=AZWOAHHvst_du9SMhHtJT8pPIXlSoaPxtBicwj0Ok-RqPFFJ_PHcARj7-kRi_OGCADyRWbyjK-gA8gpOoYIO-3gH_ewu6Vd8CQ4pOCksynrNfIg0ZATQDWzxcJ19qGIGrreuSej1Zq2h6MJc18Pi2g5cCvqjFoLkmY5A8cXroIEBog&__tn__=%2CO%2CP-R

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Hong Kong Space Robotics and Energy Centre

The Hong Kong Space Robotics and Energy Centre, led by the Hong Kong University of Science and Technology (HKUST), is a significant research initiative playing a key role in national space missions, particularly China’s Chang’e-8 lunar mission.

Key aspects of the center and its work include:

Multifunctional Lunar Surface Robots: A primary focus is the development of advanced lunar robots equipped with dual robotic arms. These robots are designed for a variety of tasks on the Moon’s surface, including deploying and installing scientific instruments, collecting lunar samples, and serving as mobile charging stations for other lunar equipment. They are being engineered to perceive lunar topography, plan and optimize their movement paths, and autonomously adapt to the Moon’s low gravity and harsh environmental conditions.

International Collaboration: The center fosters extensive international collaboration, bringing together researchers from HKUST, other local and mainland universities, the Shanghai Academy of Spaceflight Technology, and the South African National Space Agency. This collaborative approach is vital for advancing space science and addressing challenges for humanity.

Terrestrial Applications: Beyond space exploration, the center also explores how its developed space technologies can be applied to solve problems on Earth. Examples include assisting with deep-sea equipment surveys in the Greater Bay Area and maintaining nuclear power plants, which are high-risk jobs.

Talent Development: The initiative aims to train approximately 20 PhD students and employ over 70 researchers, contributing to Hong Kong’s foundational capabilities in space technology and driving innovation from concept to implementation.

Professor Gao Yang’s Role: While the information specifically states Professor Yu Hongyu as the director of HKUST’s Space Science & Technology Institute and a leader at the center, Professor Gao Yang is also a world-renowned expert in space robotics. He has been involved in China’s space efforts and has a focus on developing intelligent robots for extreme space environments and the commercialization of space technologies. His expertise aligns closely with the center’s mission.

The establishment of this center reinforces Hong Kong’s growing role in aerospace innovation and aims to position it as a hub for space technology within the Greater Bay Area.

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ASPACE Hong Kong Satellite Manufacturing Center

The ASPACE Hong Kong Satellite Manufacturing Center, operated by USPACE Technology Group (formerly Hong Kong Aerospace Technology Group), has made significant progress since its official opening in July 2023.

First Batch of Satellites Rolled Out: In March 2025, USPACE announced the rollout of its first batch of 100 satellites, marking a major milestone from concept to reality in just six years of the company’s operation. This achievement was showcased at a public exhibition in Hong Kong as the first stop of a global tour.

Operational Capacity: The facility, located in the Advanced Manufacturing Center and Data Center in Hong Kong Science Park, covers nearly 200,000 square feet. It’s equipped with advanced intelligent production lines and cleanroom facilities (ISO 14644-1:2015 Class 7/100,000), capable of mass production of satellites.

Increased Annual Production Target: While initially stating a capacity of at least 200 satellites per year, USPACE has now stated its goal to optimize its global manufacturing footprint and boost capacity to 500 satellites annually.

Cost Reduction: Through vertical integration and independently designing and manufacturing over 80% of its satellite components, the company achieved a historic 80% reduction in production costs for its first 100 satellites.

Types of Satellites: The center is capable of simultaneously developing multiple types of satellites, including communication, navigation, remote sensing (optical and radar), and carbon monitoring satellites, ranging from 10 kilograms to 1,000 kilograms.

Commercialization and Market Expansion: USPACE has unveiled competitively priced commercial optical satellites (ranging from 5 meters to 0.5 meters resolution, priced between USD35,000 and USD990,000) to enter the global market, especially targeting emerging markets and SMEs.

Global Expansion and Partnerships:

USPACE rebranded in December 2023 to better align with its international ambitions.

It is forging ties with space agencies and enterprises globally.

A significant development includes an agreement with Saudi Arabia, where ASPACE received a $266 million investment license to help the kingdom develop its domestic aerospace industry, with the potential for ASPACE to establish a satellite manufacturing facility there by 2025.

USPACE is also preparing to launch a constellation of 6,000 integrated communications and remote-sensing satellites over the Middle East and Africa in 2025, in collaboration with the Arab Building.

Financial Investment: USPACE has invested HK$1.9 billion ($244.6 million) over six years and plans an additional $300 million investment between 2025 and 2026.

Focus on Industry 5.0 and AI: The company is committed to pioneering the deep integration of Industry 5.0, artificial intelligence (AI), and big data in its satellite manufacturing processes. https://www.facebook.com/jeff.mah.5/videos/2122854564862876/?__cft__[0]=AZXdesxUosdod4PjrPeRBdv1TRdwb3i9-ROTsg4eE6xGKpXMBEcDBo0ow41d9byF7AmqcGvgSGP04gppJDiZDDwzU0GuH5Qw_aQQPwRbiUQtfg0ThAMnvPIqe4B7e9oW6p9eSSypeDWqipLgeTtVrbpT9q_Tzfdb1nLqkeuawaTlHA&__tn__=%2CO%2CP-R

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International Organization for Mediation

May 30, 2025, Hong Kong hosted the signing ceremony for the establishment of the International Organization for Mediation (IOMed).

Establishment of IOMed: The signing of the Convention on the Establishment of the International Organization for Mediation took place in Hong Kong. This new body is designed to be the world’s first intergovernmental international legal organization dedicated to resolving international disputes through mediation, complementing existing mechanisms like the International Court of Justice and the Permanent Court of Arbitration.

China’s Role: China is a founding member of the IOMed. Foreign Minister Wang Yi was the first to sign the Convention on behalf of China. Representatives from 32 or 33 other countries also signed the convention, becoming founding members. High-level representatives from over 50 countries and nearly 20 international organizations, including the United Nations, attended the ceremony.

Foreign Minister Wang Yi’s Remarks: Foreign Minister Wang Yi attended and addressed the ceremony. He affirmed China’s consistent position that differences should be handled in the spirit of mutual understanding, and consensus should be built through dialogue and consultation. He specifically stated that Hong Kong possesses unique advantages to be an international mediation hub, citing its highly developed rule of law, and its strengths in both common law and civil law systems. Wang Yi also highlighted Hong Kong’s peaceful return to China as a successful example of resolving international disputes peacefully.

Aim of the Center: The IOMed aims to offer high-end professional mediation services, providing a friendly, flexible, economical, and efficient pathway for countries to resolve international disputes based on mutual respect and understanding. It seeks to fill a longstanding institutional gap in international mediation and serve as an important public good for strengthening the rule of law in global governance.

Hong Kong Government’s Support: The Hong Kong Special Administrative Region Government has pledged full support to the IOMed. Chief Executive John Lee stated that the organization could begin its work as early as the end of this year. The headquarters of the IOMed will be located in the former Wan Chai Police Station building, which is undergoing conversion.

This initiative is seen as a move by China to enhance Hong Kong’s global status as an international legal and dispute resolution services center in Asia.