By Adam Minter

(Bloomberg View) — A bit of greater than a decade in the past, Hong Kong was the world’s busiest port. Giant vessels competed to get into the town’s berths, ready to load and unload containers full of items manufactured simply over the border in China’s manufacturing unit cities. Back then, Hong Kong nonetheless anticipated that its freewheeling industrial tradition might change China for the higher. And buying and selling — accounting for nearly 25 p.c of the town’s economic system — appeared like simply the business to paved the way.

Now these expectations are colliding with actuality. Last week, the native authorities reported that cargo flowing by way of Hong Kong dropped by 13.8 p.c in 2015, capping a dismal yr through which the town’s port declined to the world’s fifth-busiest, dropping behind one-time also-rans Shanghai and Shenzhen. It’s prone to worsen: Last yr, Deutsche Bank predicted that the amount of cargo transferring by way of Hong Kong will decline by as a lot as 50 p.c over the following decade.

That’s not simply an financial blow. For a metropolis that has lengthy valued its independence and distinctiveness from mainland China, it additionally threatens one thing of an identification disaster.

Shipping has performed a singular position within the trendy historical past of Hong Kong, relationship again to 1841 when British naval officers claimed the massive, placid harbor with the concept that it might function an ideal gateway to China’s inside markets. The port’s interval of best prosperity was the latter half of the twentieth century, following China’s financial opening to the surface world. Between 1972 and 2012, the amount of cargo transferring by way of the port elevated nearly 18 occasions over, with the quickest development between 1990 and 2000.

Two forms of enterprise propelled that development — and each at the moment are beneath critical risk.

The first is direct delivery to and from South China. For many years, the port of Hong Kong supplied higher berths, expertise and effectivity than Chinese ports throughout the border. Shippers most well-liked its predictable authorized system to the mainland, the place laws and responsibility assessments might change on a whim.

In the previous few years, nonetheless, China has been steadily eroding these benefits by constructing superior port amenities of its personal. During the second half of the 2000s, whereas the amount of cargo transferring by way of Hong Kong grew by about 2 p.c yearly, it grew by 20 p.c in Shenzhen and 57 p.c in Guangzhou. Hong Kong’s share of South China’s cargo enterprise has declined from greater than 70 p.c in 2001 to lower than 40 p.c at present.

The second essential enterprise is so-called trans-shipment. By Chinese regulation, international vessels can’t carry cargo from one home port to a different. But Hong Kong, thought-about a global port, is exempted from this restriction. Foreign ships can transfer freight from there to any variety of mainland ports. One result’s that a big business of warehouses and different infrastructure has grown up in Hong Kong to help trans-shipment, which represents 72 p.c of the port’s enterprise.

Now the Chinese authorities is beneath rising stress from international cargo carriers and mainland ports to raise the restriction extra broadly. When — not if — that occurs, Hong Kong’s place as an excellent port will solely recede additional. To some extent, that appears to be intentional: Last yr, China’s main maritime coverage institute predicted that, by 2030, “Hong Kong’s position as an international shipping center will fall.”

The native authorities is now entertaining proposals to improve and develop the port. But it’s arguably too late. It can’t change the truth that China’s economic system has expanded and modernized nicely previous the stage the place it wants a gateway. That side of Hong Kong’s identification, like so many others, will seemingly should accommodate itself to ever higher Chinese affect.

This column doesn’t essentially replicate the opinion of the editorial board or Bloomberg LP and its house owners.

© 2016 Bloomberg L.P