The International Commerce Centre soars 118 stories into the sky atop a landfill in western Kowloon. Each day, hundreds of investment bankers in suits and ties stream into the skyscraper. A total of 54 companies have moved into the 10th to 99th floors of the ICC and employ 5,000 workers.
Between floors 102 to 118 sits the Ritz-Carlton Hotel, and including guests, workers and visitors to the hotel, at least 50,000 people enter the ICC every day.
The building, completed in March 2010, dwarfed the previous tallest building in Hong Kong, the 88-story International Finance Centre 2. That year alone, it attracted Credit Suisse, Deutsche Bank and Morgan Stanley among other investment banks from around the world, achieving an impressive 95 percent occupancy.
"Between 60 and 70 percent of all real estate investment from mainland China into Hong Kong is focused on the area around the ICC," said John Siu at Cushman and Wakefield.
Hong Kong reeled from the impact of the 2008 global financial crisis, which led to massive layoffs and created idle office space across the island. But it has been able to stage a magnificent comeback by transforming itself into a hub of yuan transactions.
"The U.S. and European economies are experiencing a slump, but dynamic trade financing in Asia centered on the yuan is rescuing Hong Kong’s economy," said Mushtaq Kapasi at UBS.
The number of Hong Kong-based financial companies that deal in yuan more than quadrupled from 39 in late 2008 to 187 at the end of 2012. The total amount of yuan-denominated deposits that entered Hong Kong increased 10 times from 62.7 billion yuan in late 2009 and June of 2012, according to the Hong Kong Monetary Authority.
The island's transformation is the result of cooperation between Beijing and Hong Kong. Chinese President Hu Jintao, who visited Hong Kong in July last year to mark the 15th anniversary of the handover from the U.K., allocated half of his 30 economic support measures for Hong Kong to bolstering the financial market and the island's status as the prime offshore financing hub for the yuan.
Hong Kong already wields formidable power in yuan-based transactions and investment. In 2011, it accounted for 92 percent of China's total trade transactions (2.8 trillion yuan) and that rose even further to 97 percent in the first half of 2012.
The Chinese government and state-run banks are no longer the only entities issuing "dim sum" or yuan-denominated bonds in Hong Kong. Foreign banks and private businesses are also issuing yuan-denominated bonds to raise capital, including McDonald's, Volvo, Tesco and HSBC.
Japanese businesses issued a total of 3.4 billion yuan worth of dim sum bonds in the first eight months of 2012, a threefold increase compared to the same period in 2011.
Thirteen percent of Hong Kong's population, or close to a million people, work for the financial industry. By 2015, Hong Kong is forecast to overtake London as the world's No. 1 in terms of the total number of people working for the financial sector, according to the Centre for Economics and Business Research.
Financial industry insiders say Hong Kong is unsinkable because the island has a business-friendly system optimized for the financial sector. A stable currency pegged to the U.S. dollar, a relatively open foreign exchange market, a flexible labor force and little red tape give the island a competitive edge.
But hot on the heels of Hong Kong are Kuala Lumpur, Shanghai and Singapore. Also, Beijing recently granted authority to Singapore and Taiwan to settle yuan accounts, so Hong Kong is facing increased competition.
And many around the world are still skeptical about the power of the Chinese currency. The yuan has traded around 30 percent lower than the dollar since 2005, but the speed of strengthening has slowed. Some say that if the yuan weakens, Hong Kong's financial industry could also run out of steam and the island could end up a shopping and tourism town like Macau.