The credit rating agency Moody's downgraded its outlook on Hong Kong to negative from stable. Tara Joseph looks at the reason why.
A major blow for Hong Kong as it's pulled ever closer to Mainland China. Ratings agency Moody's downgrading its outlook for this finance and trading hub to "negative" from stable over the weekend. Part of the problem - Beijing's growing political influence. China's slowing economy has been a concern here for some time -- but now there's more trouble on the horizon. Moody's says the city's unique system of governance - with China at the top - is risky for business, and Hong Kong's institutions will loose some of their independence as Beijing's power gradually grows. This is the first time a respected ratings agency has put this city's long-held concerns about China's influence on the billboard for the world to see. Two weeks ago, Moody's downgraded Chinese debt on worries that officials may not have a firm hold on the economy. That concern is now spilling over into Hong Kong as it's pulled ever-closer under the Beijing umbrella. One side effect of the downgrade -- the already sorting costs of major infrastructure projects could go up up even further... That includes a multi-billion dollar rail project to link HK to the mainland, and a brand new runway at the airport. For years, there's been a creeping worry that China is commanding too much control over Hong Kong And if major multinationals start doubting it as a "safe" bet in Asia -- this city could have a whole new list of problems to deal with.