COMMUNISM, INC: All About the Money: Why Hong Kong Matters So Much to China.

Since 1997, mainland Chinese companies have raised $335 billion by floating in Hong Kong, tapping a broader range of shareholders than they could onshore.

Over the years, the pool of capital available at home has gotten much larger. But since the Hong Kong dollar is pegged to its U.S. equivalent, and the city has no capital controls, a listing there can generate hard currency for foreign takeovers and investments. It would be harder to use a Shanghai stock sale for the same goal.

For technology firms and others, New York has been another favored listing destination, but worsening U.S.-China relations could make this more problematic. Hong Kong offers a convenient way to tap many investors who are familiar with China.

For global investors, Shanghai and Shenzhen have become more accessible. But investors typically prefer Hong Kong’s legal protections, and they have other concerns about mainland markets, including the difficulties of moving money out.

Plus: “Foreign companies and state investors have long used Hong Kong as a staging post for investing in companies or building facilities in mainland China. As it grows richer, China is also deploying larger sums abroad through foreign direct investment, which rose from $2.6 billion in 1997 to $143 billion last year, according to data from China’s Ministry of Commerce. Much of this outbound FDI goes through Hong Kong.”

Hong Kong is a goose that lays golden eggs, but also contains a poison pill.