ABSTRACT
It is embarrassing to have made the wrong guess in the first place. It is doubly embarrassing to cast wrong predictions twice. In June 1995, Fortune magazine carried a cover story entitled “The Death of Hong Kong”. As clearly stated in the first paragraph of the featured article, carrying the same title of the cover story, Hong Kong’s future was best described in two simple words: “It’s over”. As an international financial centre and commercial city, Hong Kong was sinking, and sooner or later it would become “a global backwater”. With its subsequent reversion to China, Hong Kong would inevitably be overwhelmed by an authoritarian regime that showed little respect for the rule of law and be swallowed by a socialist economy that rewarded guanxi (i.e., social connections) and corruption. Professor Milton Friedman, a Nobel Laureate in the discipline of economics, was quoted in the report as saying that Hong Kong’s economy would be unsustainable. China would not tolerate the circulation of two currencies, namely the Hong Kong dollar and the Renminbi, within the same country and would, in a matter of time, impose capital controls. Within a short period of time, two years to be precise, economic confidence would collapse. And so, it was postulated, the world would soon be mourning the death of a once vibrant economy in Asia.
