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Hong Kong's importance as a conduit for capital flowing into and out of China has increased, but its standing as an Asian financial center has declined. (Source photo by Reuters) 

Hong Kong is transformed from Asia's financial hub to Xi's 'wallet'

City attracts more Chinese money, professionals but foreign exodus continues

TAKESHI KIHARA, Nikkei staff writer | Hong Kong

HONG KONG -- A quarter century ago, China promised Hong Kong a high degree of autonomy under the "one country, two systems" model when the territory reverted to Chinese rule. Now President Xi Jinping is using the city as a "wallet" by applying two separate standards -- "one country" for politics and "two systems" for economic affairs -- risking Hong Kong's position as Asia's premier financial center.

Beijing's view of Hong Kong has changed greatly over the last 25 years. In 1997, the territory accounted for 18% of China's overall economy; that figure is 2% today. Over the same period, the number of Chinese companies listed in Hong Kong has jumped from 101 to 1,370. These companies make up 78% of the Hong Kong stock market's capitalization.

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