The talk of decoupling the Hong Kong dollar and the US dollar has been repeatedly rumored from Hong Kong’s civil society since Hong Kong’s 2019 anti-China delivery campaign and Beijing‘s forced push of the Hong Kong National Security Law last year. Last July, there were even rumors that the U.S. would kick Hong Kong out of the SWIFT banking settlement system, saying in strong terms that it meant the decoupling of the Hong Kong dollar and the U.S. dollar was imminent, though it was eventually confirmed to be false.
The article was removed from the Chinese network to avoid causing panic in the market. Instead, it was widely circulated with a large number of analytical articles explaining in detail why the possibility of decoupling the Hong Kong dollar from the US dollar was extremely low. However, one of the articles that hit the top of Weibo recently was splashed with a sensational headline: “Hong Kong dollar, may be decoupled from the US dollar”.
The article was published on the mainstream Chinese portal “NetEase” by Wu Shengbiao, who claims to be involved in international finance and analysis of U.S. technology companies. However, his article does not contain any definite news about the decoupling of the Hong Kong dollar and the US dollar, but rather his personal opinion. This includes an explanation of the origin of the linked exchange rate between the Hong Kong dollar and the US dollar, which leads to his argument that “the peg between the Hong Kong dollar and the US dollar is not inevitable”.
Other reasons he mentioned include the US Federal Reserve’s quantitative easing policy, the fact that Hong Kong’s foreign debt is three times its foreign exchange reserves, and the fact that Biden has not lifted the sanctions against Hong Kong’s Chief Executive since he took office.
Hong Kong dollar will be decoupled from the US dollar “either this year or next year”
Finally, he concluded that the Hong Kong dollar will be decoupled from the US dollar “either this year or next year” unless Biden lifts the sanctions against Hong Kong’s Chief Executive.
And he believes that after the Hong Kong dollar is decoupled from the U.S. dollar, it will be pegged to the Chinese yuan, which will become a “big overseas yuan”, and Hong Kong stocks and A shares will soon have the same price.
This article, with an alternative viewpoint but with a headline that is enough to cause panic in the market, managed to pass the censorship of mainstream portals and circulated on Sina Weibo, causing outsiders to question whether it was intended to be a release.
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