Hong Kong (AFP)

Hong Kong does not weigh as much in China's GDP as it did in China in 1997, but the semi-autonomous region shaken by unprecedented pro-democracy protests remains Beijing's main economic gateway to the world.

The political crisis in the former British colony jeopardizes the Hong Kong economy and could have worse consequences than the 2008 financial crisis, recently warned Carrie Lam, the head of the local executive, appointed by Beijing .

And such a slowdown should not be without consequence for Beijing.

True, Hong Kong's GDP is only 3 percent of China's, compared with about 18.5 percent in 1997, according to World Bank data.

But the former British colony retains a prominent place for the second largest economic power on the planet.

"Hong Kong's importance in the Chinese economy is disproportionate to its size" of just 1,100 square kilometers, says Tianlei Huang in an analysis for the Washington-based Peterson Institute of International Economics.

Since 1997, Beijing "has developed tremendous economic and commercial interests in this territory.Chinese leaders realize that, to ensure its own prosperity, China still needs a capitalist Hong Kong."

Especially since some of them personally hold funds in Hong Kong banks and have directly invested in the real estate, businesses or businesses of the territory.

"There is massive investment in Hong Kong so-called red aristocracy," members of the leadership of the Chinese Communist Party, said Willy Lam, an analyst at the Chinese University of Hong Kong. "They do not want the stock market and the real estate market to collapse."

- free movement of capital -

The semi-autonomous territory holds many assets for Chinese entrepreneurs.

He is 4th in the World Bank's 2019 ranking on the ease of doing business when mainland China is only 46th.

Thousands of Chinese companies benefit from the great ease with which capital can flow there, unlike the rest of the country, which does not enjoy the same regulatory flexibility.

Figures on the intertwining of the Hong Kong economies and mainland China, speak for themselves. According to the Hong Kong Trade Development Council (HKTDC), nearly 60 percent of investment from China passes through Hong Kong. In the other direction, the semi-autonomous region also injects a lot of capital: it is the largest source of foreign direct investment in mainland China, according to the HKTDC.

- Great financial center -

Hong Kong is one of the major financial centers of the planet and a large part of the Chinese companies are listed there.

Since 1986, nine of the ten largest IPOs in this market have been for Chinese companies, according to Hong Kong Exchanges and Clearing Limited (HKEX), which manages the Hang Seng Index.

The actions of Internet giants Tencent and Ping An insurance are already exchanging themselves. And the e-commerce titan Alibaba, already listed in New York, is considering a second listing in the former British colony to ensure access to Asian investors in the middle war between Beijing and Washington.

If the protest movement against Beijing continues, Chinese companies on the Hong Kong Stock Exchange may be hit hard.

"The (ex-colony's) ability to raise capital for Chinese companies will be eroded if political instability (...) persists," said Ming Sing, a professor at Hong Kong University of Science and Technology. .

- legal security -

The Sino-British Declaration of 1984 regulates the retrocession of territory in 1997 under the principle of "one country, two systems", a special status which is supposed to remain in force for fifty years.

This autonomy offers thousands of foreign companies (banks, insurance, consultants) but also hundreds of Chinese companies legal certainty, unlike mainland China.

"US, European and Asian multinationals want their contracts signed in Hong Kong because they will be subject to British-style laws and regulations," said Willy Lam. "If they sign in Shanghai, there is no comparable protection."

© 2019 AFP