Thursday, 29 October 2015

HK to unleash Belt & Road prospects

Chief Executive CY Leung

I am pleased to be here, to have this opportunity to address the China Daily Asia Leadership Roundtable, to share some of my thoughts on how Hong Kong can best position itself for the Belt & Road initiative.

 

The theme of today's roundtable - Hong Kong Unleashing the Potential of the Belt & Road - has been cleverly crafted. For the country, it is an unprecedented strategic vision. And while its promise for Hong Kong is equally outsized, we are a relatively small economy, despite our international standings. And it may seem disproportionate, at first thought, to say that Hong Kong can unleash the potential of the Belt & Road.

 

On second thought, however, I believe our strength, all along, has been the ability to establish ourselves as an indispensable player in the global economy, as well as the national development of China, despite our modest size, despite our relative lack of natural resources.

 

Our success has been powered by the twin engines of China and the world: by our ‘One country, two systems’ arrangement and the deepening economic integration this has won us, and by our strong connections with the rest of the world. In both cases, by the super-connector role we play for them.

 

The international landscape, however, is changing fast. Developed and developing countries alike, confronted with growth bottlenecks, are looking everywhere for growth prospects. To stay relevant, to remain competitive, Hong Kong must also adapt. Belt & Road timely provides us the opportunities.

 

Can we help set the Belt & Road in motion and, once that's achieved, can we accelerate its progress? I believe we can.

 

High degree of openness

I think we have what it takes, starting with the high degree of openness that characterises Hong Kong. That includes, of course, our economy, which has been consistently recognised as the freest in the world.

 

We are also open because people and businesses from other parts of the world with widely different cultures and values find us welcoming. International businesses know that our playing field is level. Our competitors know that the Hong Kong Government does not own businesses that compete with them.

 

Hong Kong is surely the only city in the world where both English and Chinese are official languages and, more important, widely used. Also, we are the only city in the whole of China where universities, and many high schools, use English as the teaching medium.

 

A few weeks ago, I made an official visit to Indonesia, a country of 250 million people, and met separately with the President and Vice President. One of the follow-ups is education. Already we host more than 200 full-time Indonesian students in our universities. We see good potential in the future as more students want to study in Hong Kong, and that is Hong Kong, China, in English.

 

Open minded people

And we have open minds, too. Many Hong Kong people, especially the younger ones, are enthusiastic about acquiring additional languages for work, for study, or simply to become better acquainted with an overseas culture that interests them. A case in point is the Working Holiday Scheme. Since its inception in 2001, over 65,000 Hong Kong youths had participated in this scheme and spent their holidays working in our partner economies. What they have learned and the friendship they have gained certainly is a key asset, allowing us to stay connected to the Mainland while reaching out to the world.

 

That level of connectedness, of enthusiasm in the world beyond Hong Kong, is underlined by our dynamic civil society. The businesses, organisations, institutions and individuals of Hong Kong have created, and continue to expand, their international networks. Those ties are invaluable social capital. They also pay far better dividends than most investments.

 

I highlight these aspects because they are like air and water to us. Because of that, we sometimes overlook their critical importance. The Belt & Road initiative covers a great many aspects and sectors. Fundamentally, however, the initiative is about making connections.

 

Highly connected

If we can leverage on our social capital, we will be the best-placed Chinese city to contribute to the Belt & Road, certainly in enabling people-to-people bonds, or in Chinese, "民心相通", one of the five themes of the Belt & Road initiative. We can turn Hong Kong into a platform of facilitating understanding and fostering friendship among peoples, peoples coming from not only Belt & Road countries, but from all over the world.

 

What's more, the Basic Law readily promotes our international standing. Chapter VII of the Basic Law, on external affairs, states that, using the name "Hong Kong, China", we can maintain and develop relations and implement agreements with foreign states and regions and relevant international organisations in areas ranging from the economy, trade, finance and monetary matters, to shipping, communications, tourism, culture and sports.

 

We are certainly not reluctant to do so. Hong Kong actively participates in APEC and the World Trade Organisation as an individual member economy, and we negotiate and seal bilateral and multilateral agreements in trade, investment and avoidance of double taxation, as well as maritime and air services arrangements with foreign states.

 

Unleashing potential

More than a city of China, Hong Kong maintains a reputable standing and valuable connections in the international arena. And that sets us apart from other cities in the Mainland and overseas. And that's how we can help unleash the tremendous potential of the Belt & Road.

 

Now let's take a look at some of our other strengths - advantages that are also directly relevant to unleashing the potential of the Belt & Road.

 

Finance is as good as any place to begin. Hong Kong is China's international financial centre and one of the world's financial capitals. We run the world's seventh largest stock market in terms of market capitalisation, and we rank second, globally, in equity funds raised through initial public offerings. We have the experience, the expertise, the capacity and the connections to serve as the fund-raising and financial management hub for the Belt & Road.

 

Hong Kong is the world's largest offshore renminbi business centre. Our renminbi services range from cross-border trade settlement to bond issuance. And as trade and other economic activities along the Belt & Road expand, demand for renminbi trade settlement will also rise. We are well placed to respond to that demand.

 

Islamic bond centre

Islamic financial services will feature large under the Belt & Road, given the significant Muslim population embraced by the initiative. Hong Kong is emerging as a regional centre for the issuance of sukuk, or Islamic bonds. Indeed, we've issued two major sukuk in the past 13 months, clearly demonstrating our capabilities in this specialised financial offering.

 

Asset and risk-management services will also be needed once the projects of the Belt & Road get going. Hong Kong's wealth and asset-management business has soared in recent years, making Hong Kong a global centre for asset management, risk management and corporate treasury functions. We also boast a wide variety of insurance services and derivative products to help international companies manage their risks.

 

And not just finance. International trade induced by closer co-operation among Belt & Road economies demands logistics it can count on. That's another plus for Hong Kong. We boast the world's fourth busiest container port, providing some 350 services a week to more than 500 destinations worldwide. About 700 shipping-related companies call Hong Kong home. They offer a wide range of services, from ship management, broking and chartering to finance, marine insurance, legal, arbitration and other support services.

 

Logistics hub

Hong Kong International Airport is the world's busiest air cargo airport, running about 1,100 flights a day. In all, Hong Kong is home to about 14,000 logistics companies, most of them enabling the trade between China and the world. So you know that Hong Kong will provide the Belt & Road with all sorts of customised supply-chain solutions.

 

Beyond our traditional pillar industries, our technology and creative sectors have much to offer to the markets of the Belt & Road. In this, I'm thinking of our cultural industries, including film, as well as education, healthcare services and product testing and certification.

 

We can, as well, develop talent for the emerging economies along the Belt & Road, and in areas beyond trade and finance. Building on the strength of our social capital, we can serve as a regional hub for scientific research, education, the arts and culture.

 

The Belt & Road will help power the future - for the Mainland of China, for the more than 60 economies along its linked corridors and for Hong Kong.

 

I urge you to find your place in Hong Kong - the Belt & Road’s fast lane. You, and I, and all of us, can take part in this once-in-a-lifetime journey if we seize the opportunity today. I'm confident that it will be both worthy, and rewarding, for all concerned.

 

Chief Executive CY Leung gave this address at the China Daily Asia Leadership Roundtable - Hong Kong Unleashing the Potential of Belt & Road Initiative.

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