Hong Kong: painful reality

Both Occupy Central and its nemesis Anti-Occupy might agree on one thing: a win for the other side is a threat to Hong Kong's special status as the commercial gateway to China.

Obituaries for the territory's privileged position have been written before. Then - in 1997 when doomsayers predicted Communist party mismanagement, and in the 2003 Sars panic - the old system proved resilient. The government (Hong Kong's or China's, as you please) was supportive. Hong Kong has globally credible legal and commercial standards. The arrangement benefited both sides.

But China no longer needs Hong Kong as much as it did. Shenzhen and Shanghai have grown up. China's growth has made the country an essential partner. So China can set its own terms, from multinationals' pricing policies, to the law its firms apply to commercial contracts. Hong Kong may stand up for its independence, but China will direct where business should go.

The shift may have painful consequences for Hong Kong, as evidenced by corporate behaviour. Since 2011, long-term resident Swire - with businesses spanning property, transport and food - has divested more assets than it has acquired in China and Hong Kong. Even Li Ka-shing is hedging his bets. Over the same period, his Cheung Kong group of companies - with interests in real estate, telecoms and retail - has invested more in developed market utilities than any other sector.

Hong Kong's pull has already slipped as mainland officials rein in conspicuous spending. Commercial and residential developers and landlords could lose more revenue as professional services shift staff elsewhere. Hong Kong will remain a great global city with a self-determined identity. But its role as a commercial gateway to China is likely to decline in any case.

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