Foreign critics often ask whether the RMB can truly internationalize under China's capital controls. Hong Kong provides the answer: yes, if there is an offshore valve sophisticated enough to bridge the two systems. Beijing understands this. It is why the city continues to be the testing ground for every major RMB liberalization step.

Capital markets make the point even more sharply. While some observers fixate on declining IPO volumes, they overlook the structural reforms quietly transforming how international capital interacts with China.

Listing reforms, cross-border fund distribution and improved market infrastructure are positioning Hong Kong as the most effective - and arguably the only credible - offshore venue for raising Chinese capital globally.

China is not simply defending Hong Kong's status as a global market; it is reengineering it. The city offers something no other financial center can: the ability to channel global capital into China without exposing the onshore system to destabilizing flows.

This dual-track structure - onshore for scale, offshore Hong Kong for global reach - is the backbone of China's financial strategy. To dismiss Hong Kong because its IPOs no longer mirror the exuberance of the 2010s is to misunderstand its new purpose. Its value lies not in speculative cycles, but in strategic function.

The wealth-management shift is even more revealing. As China's affluent class expands, Hong Kong is becoming the only offshore hub capable of handling Chinese wealth at global standards.

Family-office incentives, tax clarity and a regulatory environment aligned with international compliance norms make the city uniquely suited to manage China's growing private capital - capital that Beijing increasingly wants deployed in global markets rather than parked domestically.

This is not capital flight; it is capital strategy. Hong Kong is becoming the offshore balance sheet of China's globalising wealth.

But it is in innovation where Hong Kong's new identity becomes unmistakable. While other financial centers debate whether digital assets and fintech belong within their regulatory remit, Hong Kong is building frameworks to actively integrate them.

These are not cosmetic signals. They represent an attempt to anchor the city at the frontier of financial experimentation, from virtual-asset licensing to green-finance taxonomy to cross-border fintech pilots.

Critics once argued Hong Kong lacked a defining role in China's tech-driven economic future. That view is now obsolete. In financial innovation, the city is becoming the bridgehead where China tests what it cannot yet fully implement onshore, and where global investors engage with new Chinese financial technologies under familiar regulatory oversight.

The implications extend far beyond the city. A more internationally connected Hong Kong strengthens China's ability to shape the rules of global finance - not by demanding them, but by participating in them.

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Through Hong Kong, China can influence capital standards, payment systems, green-finance frameworks and digital-finance architecture. No other platform affords this leverage.

The real risk for Hong Kong is not irrelevance; it is complacency. The city must continue to move faster than its rivals - and faster than the geopolitical narratives that seek to diminish it. Its comparative advantage lies in being both deeply Chinese and institutionally global. That duality is not a vulnerability; it is the source of its power.

The world's fixation on Hong Kong's past distracts from the far more important story of its future. The city is becoming the operational center of China's financial modernization and the offshore engine of its global financial projection.

If China does emerge as a financial powerhouse in the coming decades, Hong Kong will not merely have played a role - it will have been the pivotal platform that made it possible. Hong Kong is not a fading star in Asia's financial constellation. It is the quietly rising one, and China's global financial strategy depends on it.

The writer is a senior finance professional and an AsiaGlobal Fellow at the University of Hong Kong, specializing in China's financial globalisation.

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