Friday, 16 October 2015

HK enjoys strategic advantage

Chief Executive CY Leung

I'm grateful for this opportunity to address the Hong Kong Association, to speak to you - good friends of Hong Kong. I see many familiar faces; some, of course, are old friends, or should I say, long-time friends. And I take heart in that.

 

As American poet Ralph Waldo Emerson - a man who knows his way around words, and around friends - once said: "It is one of the blessings of old friends that you can afford to be stupid with them."

 

For those of you who may not yet be old friends, don't worry. We will soon be.

 

Strong ties

The reason is simple. Hong Kong has strong and long-standing ties with the UK, particularly because Hong Kong is an open society and a welcoming society.

 

More than 17,000 British nationals are based in Hong Kong, where East has met West. They're in Hong Kong for good business reasons, of course. For great life reasons, too.

 

Starting from the arts scene. Hong Kong is home to more than 1,000 arts groups, and they organise more than 8,000 performances a year, attracting over three million people. Many of these groups are active internationally.

 

Earlier this year, for example, the Hong Kong Philharmonic Orchestra presented concerts at Cadogan Hall in London and Symphony Hall in Birmingham, as part of its European tour. And, this past summer, the Tang Shu-wing Theatre Studio performed Macbeth in Cantonese at the Globe Theatre in London. That's just a creative sampler.

 

Cultural connection

Culture is doing a roaring business, too, in Hong Kong. The third edition of Art Basel, in March, showcased more than 230 galleries from nearly 40 countries and regions, including 38 galleries from the UK. The art show drew nearly 60,000 buyers and visitors from around the world, that of course included visitors from the Mainland of China.

 

Galleries devoted to international and Chinese art are as rife as British brands on the streets of Hong Kong. Indeed, Hong Kong is among the world's largest art auction markets. In April, the Royal Institute of British Architects helped organise "Great by Design: British Architecture - Asian Vision," in Hong Kong, a celebration of British architecture in Asia and, in particular, Hong Kong.

 

East and West will continue to fashion our unique cultural identity - thanks, in part to the West Kowloon Cultural District. Extending across 40 hectares of Victoria Harbour's waterfront, the expensive real estate - the Cultural District is now taking creative shape.

 

This summer, a Nursery Park was open to the public and animated with a series of cultural events. An arts pavilion and a black-box theatre, as well as the Xiqu Centre for Chinese opera, is scheduled for completion starting from 2016. Cantonese opera, by the way, was the first Hong Kong treasure to be inscribed in UNESCO's "representative list of intangible cultural heritage."

 

The District's M+, a 60,000-square-metre museum designed by Herzog & de Meuron, is expected to open in 2019, with a big spotlight on visual culture. 

 

Education collaboration

Turning to education, Hong Kong's post-secondary institutions enjoy more than 160 exchange agreements and 235 research collaborations with UK institutions.

 

I used to study here.

 

I am sure you know generations of Hong Kong students come to the UK to pursue their studies. I was one of them. But the education flow is not all one way. I'm pleased to note, over the past year, some 400 exchange students from the UK have studied at our eight post-secondary institutions.

 

And if you go to Hong Kong for business, you would even find Hong Kong enticing.

 

Legal-business nexus

Let me start with the legal system. Hong Kong's common law legal system, rule of law and judicial independence are practically the same as that of Britain, as you well know. They are our core values. Rock solid. Iron-cast.

 

Hong Kong's bedrock legal institutions work hand-in-hand with our business-friendly culture. I'm talking about our open markets and open minds, low and simple taxes, free flow of capital and information, level playing field and other advantages. Collectively, they help make Hong Kong the freest economy in the world. And you need not take my word for that.

 

In January, the US Heritage Foundation named Hong Kong the world's freest economy - for the 21st year in a row. And, just last month, Hong Kong led the way in the "Economic Freedom of the World" report, put out annually by Canada's Fraser Institute.

 

Economic freedom attracts capital; it also makes profits. One good reason why Hong Kong is among the world's three major financial centres, alongside London and New York. And, as China's major international financial capital, we have an ace up our sleeve.

 

Strategic advantage

Yes, in Hong Kong - and nowhere else - China advantages and global advantages come together, thanks to our "one country, two systems" arrangement. The advantages are clear and compelling. And not only for Hong Kong. For other investors too, British investors included.

 

A case in point is the Mainland and Hong Kong Closer Economic Partnership Arrangement or CEPA, a Free Trade Agreement concluded between the Mainland and Hong Kong. Under CEPA, by setting up in Hong Kong, and partnering with Hong Kong companies, UK companies can target markets in the Mainland, and throughout Asia. That's one of the reasons why some 600 UK companies maintain an office in Hong Kong.

 

The "one country, two systems" advantage is also obvious in the financial sector. Hong Kong is both China's international financial centre and the world's China financial capital. More importantly, we serve as China's launching pad for its financial reforms, and as its gateway for the opening up of its financial markets. So we enjoy first-mover advantages, and we have first-hand knowledge and experiences. We are pleased to share them with UK businesses and investors.

 

More than 1,700 companies are listed in Hong Kong, including Mainland and overseas companies. They are here because of Hong Kong's market liquidity and our access to global investors. They are here also because Hong Kong offers the combined advantage of "one country" and "two systems". Last year, our stock market raised HK$233 billion through IPOs, second globally, behind the United States.

 

Belt & Road benefits

I am sure many of you are familiar with the Renminbi business in Hong Kong. So I won't go into details. I would, however, supplement on the mutual recognition of funds arrangement between Mainland and Hong Kong, which just got going in July. It's the first mutual recognition of funds' arrangement between the Mainland and a market outside it. In short, it's a breakthrough, and will expand investment on both sides, while boosting Hong Kong's status as an international asset management centre.

 

Before I close, I understand many of you may be interested in the Belt & Road initiative of China, and how Hong Kong, together with the UK, can benefit from it. Let me just say that we see the Belt & Road as a two-way street that will bring benefits and opportunities to both China and the economies connected via the initiative.

 

In pursuing Belt & Road, Hong Kong, leveraging on our strengths, can serve as a valued partner and turn opportunities into results in areas such as trade facilitation, investment promotion, intellectual property protection, professional services and dispute resolution. 

 

Hong Kong's most valuable asset, our people, who are well-travelled and well-connected, and who speak both Chinese and English, can also be the "neural transmitters" that allow connections across multiple disciplines, cultures and time-zones, thereby building up people-to-people bonds. In short, we can be the bridge linking up China and Belt & Road.

 

Hong Kong's role, to summarise, is the super-connector between the rest of China and the rest of the world. We super-connect not just for economic objectives. As recent initiatives have proven, we do it as well in the space of science and technology, arts and culture and medicine. We find our role rewarding and meaningful, for Hong Kong, for China and for our international friends. 

 

And so do the ties between us, between Hong Kong and the UK. They will continue to flourish, I'm sure. And we will continue to build our future. Together.

 

Chief Executive CY Leung gave these remarks at a Hong Kong Association luncheon in London.

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