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The following is the full text of the speech made by the Chief Executive, Mr Tung Chee Hwa, at a seminar on "New Era of the Pearl River Delta: Further integration with the World Economy" organised by the Central Policy Unit this morning (January 9):
Good morning, ladies and gentlemen,
I am glad to see so many of you here today, joining the discussion on the future of the Pearl River Delta (PRD). Many of you have invested and worked in the PRD, and your successes have contributed to the rise of the region as a leading manufacturing centre. Others among you have pursued studies on the region, which with its dynamism and complexities is indeed worthy of cross-faculties research by the best academic brains.
I also see familiar faces from our international business community, as well as representatives from the international media and the consular corps. People overseas used to have only heard of the Yangtze and the Yellow River in China. Now economic successes have propelled the Pearl River to the forefront of international attention.
I am sure that with so much expertise and enthusiasm gathered in this room today, this seminar will prove to be most fruitful, coming up with ideas and suggestions valuable to both the private and public sectors.
Before I get on to the main subject of today's gathering of PRD, let me just say a very few words about one particular point of my Policy Address which I delivered yesterday.
In my Policy Address, I pointed out there is a strong consensus in the community in the direction in which our economy should be developing. Simply put, we should focus our effort in leveraging on our enormous and irreplaceable competitive advantages, consolidate and strengthen our role as an international financial centre, and centre of logistics, tourism and business support services. We shall give new impetus to develop creative industries. We shall accelerate our economic integration with the PRD. I believe this is the way forward, this is the way to get Hong Kong's economy moving again and this is the way that will ensure eventual success in Hong Kong's economic restructuring.
Now let me talk about the PRD, the topic of today's gathering.
Hong Kong and the PRD have developed a very productive synergy since China's reform and open policies more than two decades ago. The highly successful `front shops, back factories' model of economic co-operation is now classic.
The latest study by the University of Hong Kong shows about 11 million workers are employed by Hong Kong companies in the manufacturing facilities in the PRD. Hong Kong has been consistently the largest source of foreign direct investment (FDI) in the PRD and the whole of Guangdong province, with a total of US$79 billion realized direct investment at the end of 2001. Indeed, Hong Kong has contributed enormously to the success of the PRD while at the same time accumulated substantial benefit to ourselves. Truly a win-win situation.
The complementary strengths of Hong Kong and the rest of the PRD have combined to produce phenomenal growth. Hong Kong is the hub for business, logistics, finance and services of the region. What about the PRD? With interlocking clusters of internationally successful industries and services, and the active participation of a continuous stream of upstarts as well as numerous small and medium enterprises, the PRD displays great flexibility in meeting changing market conditions as one of the world's leading power base in manufacturing.
In the words of Professor Enright, sitting here, 'the delta has been the fastest-growing part of the fastest-growing province in the fastest growing large economy in the whole world.'
After a quarter of a century of high growth, the PRD is now ready to take on new challenges. The combined GDP of Hong Kong, Macao and the rest of the PRD reached US$260 billion in 2001, placing the region amongst the top 20 economies in the world. The combined GDP of Hong Kong, Macao and the PRD will reach well over US$500 billion in 10 years' time.
The PRD has the highest per capita income on the Mainland, and its population of over 40 million is also becoming an increasingly attractive consumer market, an enormous opportunity for Hong Kong business. Also, as PRD becomes increasingly sophisticated, there is a great need for Hong Kong's professional services, another opportunity for Hong Kong. This opportunity will be enhanced by the CEPA (Closer Economic Partnership Arrangement) which is being negotiated and is expected to be concluded by June this year.
Emerging Consensus
Another reason for saying that this is the right time to articulate the strategic vision for the region is the emerging consensus in our community.
In the immediate aftermath of Hong Kong's return to China, a lagging mindset had persisted among people here. There was concern that closer economic ties with the Mainland would undermine our autonomy. With the actual experience over the past five and a half years, people are now reassured of the successful implementation of 'One Country, Two Systems'. Our autonomy, our socio-economic system and our way of life are upheld by robust institutions, guaranteed by our Basic Law, and our clear boundary will always be rigorously maintained.
The former wariness has now given way to a mainstream view that recognises that in the process of economic restructuring there is an urgent need for Hong Kong to leverage on the immense potential of the PRD.
Indeed, in today's competitive world, a stand alone city economy cannot compete effectively. A regional economy pooling the strength of the cities in the region together is the way forward.
The new consensus in fact extends beyond Hong Kong. In my meetings with Guangdong provincial leaders as well as those from the PRD municipalities, I have found a marked convergence of views. We all share a sense of urgency for greater co-operation, and the only way forward to maintain competitive edge is to pool our strengths together. This view is also shared by the Chief Executive of Macao.
Among the other cities of the PRD, there is a realization that Hong Kong's competitive advantages as a world-class international centre of finance, business and logistics are irreplaceable, and in fact are valuable assets to the region as a whole.
The Central People's Government also fully backs our joint efforts to develop the PRD as the most outward-oriented region leading in the drive towards modernisation.
Aiming High
We are aiming high. Our vision is to develop the PRD into an internationally competitive major economic region. It will not only be a manufacturing base with new technology inputs, but also a principal provider of modern services to China and the Asia-Pacific. It will host clusters of internationally competitive enterprises, engaging in logistics, professional and financial services, tourism and entertainment, communication, consumer and personal services, in addition to other high-value added activities.
Guangdong leaders and I agreed we should bring our co-operation to a new and higher plane. We already have past experiences of successful co-operation. We will build on our joint achievements and strive for new breakthroughs.
For example, we shall explore new areas of co-operation in the financial sector, in the professional service area, in improving market regulation, and in education, to name just a few.
We shall enhance our co-ordination in infrastructure projects, and strengthen our world-class logistics services.
One important area to explore is the development of the western part of the PRD. We believe that a bridge linking Hong Kong to Macao and the western part of the PRD will be of strategic importance. Feasibility studies will be conducted to assess carefully the ecological and environmental impacts, as well as the economic benefits of this project. Once proven feasible, we will move ahead with the bridge.
While working closely on regional infrastructure projects and new modes of communication, we know that nothing can replace personal exchanges. Acting on our request, the Central Government has agreed in principle to further relax the travel arrangements for Guangdong inhabitants, to allow them to visit Hong Kong as individual travellers. This will give a further boost to our tourism industry while at the same time help strengthen our ties and facilitate future co-operation.
Cosmopolitan Outlook
We have positioned Hong Kong as Asia's World City. The purpose of our initiatives in the PRD is to bring the whole region to the world, and the world to the region. The PRD Economic Region will elevate in status to become an important global player.
We will continue to actively explore world markets, to attract more foreign capital and talents, and encourage more multinational corporations to set up their regional headquarters in Hong Kong.
With China already in the WTO and the Mainland market further opening up, we are working to attract numerous small and medium enterprises from North America, from Europe and Japan to use Hong Kong as a base to enhance their operational efficiency and competitiveness, that is, to set up regional offices here to manage their business activities in the PRD. We will also proactively help PRD enterprises in establishing sales offices in Hong Kong.
I have spoken on some of the work that the SAR Government will do. Coming, myself, from the private sector, I know where to look for the most innovative ideas.
The spectacular development of the PRD in the past quarter of a century has been private-sector led. In building the region into an international economic powerhouse, we will be similarly relying on the efforts of the private sector. We in the Government will provide support and will work with the Central Government, the Provincial government and the governments of other cities in the region to ensure smooth sailing for our private sector.
We see clearly the opportunity presented by developments in the PRD, and there is agreement in our community to act upon it. The timing is right. We are in the right place, and we have the right people with knowledge both of China and the world. We are in an enviable position. We have the formula for success. We shall join hands to achieve it.
Thank you very much.
End/Thursday, January 9, 2003
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