Chinese state media issued a commentary expressing confidence in Hong Kong’s ability to withstand economic downturn due to a track record of effective central government support – including against George Soros-led currency speculation in 1997.

«While the global financial system has undergone dramatic changes over the past two decades and patterns of financial crises have been changing all the time, history always repeats itself in one way or another,» said a «Global Times» commentary. «Therefore, a close look at the experience and lessons of the past crisis may still have relevance in terms of understanding the current situation.»

The report recalls the major financial events during the 1997 crisis including the fall of multiple Asian currencies and the record HK$79 billion ($10 billion) trade on August 28, 1998 that would eventually «[force] Soros and others to leave with losses».

Cause of Retreat: Beijing’s Expressed Backing

According to the commentary, Soros did not back down at the time due to a lack of capital but rather the threat of support from central government leaders in the mainland. 

«The reason why Soros withdrew from the Hong Kong market is not because he had run out of ammunition, but because he had seen the repeated expressions of support to Hong Kong from top leaders of the central government,» the report explained. «The backing of the central government is an important source of confidence for Hong Kong, which sometimes is a matter of survival when it comes to the financial crisis.» 

«Always Ready to Help Hong Kong»

Despite ongoing conflict in Hong Kong between anti-government supporters and a pro-Beijing leadership, the city remains as China’s window to «the outside world» and 1997’s defending of the peg set precedence for preventing financial contagion from reaching the mainland.

«Based on the experience and lessons of countries and regions in dealing with the Asian financial crisis, it would be problematic for China to allow sharp depreciation of its currency or to tighten capital control to prevent the recurrence of a financial crisis in Hong Kong,» the report added. «And just as in the past financial crisis, the central government is always ready to help Hong Kong.»