(Analysis) Could Hong Kong after Merger with Shenzhen Help China's One Belt One Road Thrive?
2016-07-26 08:44:08 source：Eurasia Review
By Keith K. C. Hui
July 24, 2016
"According to the International Monetary Fund (IMF) June 2016 research report 'Neoliberalism: Oversold?' which was described as 'a political bombshell … that caused a near-panic among advocates of free market policies' by the Foreign Policy analyst Rick Rowden, what 'capital account liberalization' brings to developing countries is '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'.
As China happens to be in the middle of the capital account liberalization process with a view of making its Renminbi (RMB or China Yuan) freely convertible in the international FX market, Beijing would probably adopt a new growth strategy with reference to such an IMF conclusion. In fact, Beijing is facing a new headache after Brexit because its previous plan of using London, alongside with Hong Kong (a special administrative region in China), as another major offshore clearing center for RMB may not work out as expected, were the secessions of Scotland and Northern Ireland from the United Kingdom to materialize. To find a Plan B, several Chinese scholars have immediately called for the removal of this clearing center from London to Frankfurt or Brussels. However, the long term future of European Union (EU) and Euro are also in danger of deformation or even disintegration amid the rampant emergence of localism, racism and protectionism."
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