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Following is the speech (translation), "Through Leverage on Complementary Strengths To Mutual Prosperity", by the Chief Executive, Mr Tung Chee Hwa, at "A Closer Economic Partnership with Shanghai under CEPA" Conference organised by the Business and Professionals Federation of Hong Kong today (October 31):
Ladies and gentlemen,
It is a highly worthwhile endeavour for the Business and Professionals Federation of Hong Kong to organise this conference, in conjunction with four major business chambers, to examine the prospects for cooperation between Hong Kong and Shanghai following the signing of the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA).
Economic exchanges between Hong Kong and Shanghai have been continuous for more than a century. At different times, different modes of cooperation and interaction have served to forge solid economic ties between us. Indeed, Hong Kong's early take-off benefited greatly from the support and participation of numerous entrepreneurs from Shanghai, and ever since the Mainland began its process of reform and opening, Hong Kong investors have played an active role in Shanghai's economic modernisation. Nowadays, with increasing exchanges between the two cities, especially at the level of business, our economic partnership is closer than ever.
The recent signing of CEPA between the HKSAR Government and the Central People's Government has created vast opportunities for cross-boundary exchanges and cooperation, opening up a new era of Hong Kong/Shanghai synergies. The Central People's Government always gives much attention and support to enhancing Hong Kong/Shanghai economic co-operation, and the business sectors on both sides have long been vigorous participants in these efforts. The Shanghai delegation's visit to Hong Kong has provided another forum for direct exchanges. Local officials and businessmen have had thorough and fruitful discussions with their Shanghai counterparts on how to step up economic cooperation within the CEPA framework, laying a solid foundation for long-term relationships. We will follow up these latest moves towards increased cooperation with substantive actions. Our discussions with the Shanghai delegation headed by Mayor Han Zheng were very successful. Here I would like to make some observations and talk about my vision of the future of bilateral developments between Hong Kong and Shanghai.
First of all, Shanghai is a strategic partner in the future of Hong Kong.
In this era of globalisation, as the world's freest economy and a premier international finance, shipping and business centre, Hong Kong maintains constant exchanges with other economies and major cities around the world. Many of these have become our steadfast business partners. These global connections are crucial to Hong Kong's future. We must push ahead in this direction to reinforce our global market network. Meanwhile, we must also recognise that no small economy can depend on its own resources alone to compete in the global arena. It must reach out to integrate its resources with those of other regional economies in order to create a regional competitive edge. Today, ASEAN and even broader regions are working to integrate their individual markets into larger common markets that are able to propel all of them at once towards prosperity. With our historical links, how can Hong Kong and Shanghai possibly ignore the strategic relevance of enhanced cooperation? Hong Kong must by all means work more closely with Guangdong Province, and at the same time it must step up cooperation with Shanghai. Synergies will enhance the economic strengths of both sides, creating a powerful competitive punch conducive to the development of our respective roles within the global economy.
In the context of China's economic advancement, Hong Kong/Shanghai cooperation will enable these two most creative and dynamic cities to contribute to the country's medium- and long-term development in different but complementary ways. Throughout China's modern history, Hong Kong and Shanghai have played significant roles at different times. Shanghai, with its strategic location, its abundance of talent and its business foundation, has always been the engine of China's economic growth, turning out scientific and management professionals in large numbers and producing a host of quality consumer goods. In recent years it has spearheaded East China's rapid economic development. For its part, Hong Kong, with its excellent harbour, its rich human resources in the areas of capital-raising, IT and management, and its place in the global market network has served as the gateway to China ever since the advent of the reform and opening policy. In the process, Hong Kong shifted its traditional factory base to the Pearl River Delta, thus creating an urban corridor with enormous manufacturing capacity. We can say that Hong Kong and Shanghai possess different advantages, that they are two engines simultaneously propelling China's economic reforms and advances. Closer Hong Kong/Shanghai cooperation has a significant purpose: to explore the ways in which we complement each other so as to create a win-win situation in which we assume constructive roles in South and East China respectively, helping the national economy in the process.
My second observation is that the development of Shanghai fosters the development of Hong Kong, hence creating this win-win situation.
Hong Kong and Shanghai are distinct social, economic and industrial formations. The structure of our human capital, our hinterlands and our legal institutions is different. Yet in our future social and economic development, there are wide areas of cooperation that will strengthen each partner's advantages. Hong Kong and Shanghai together can optimise their resources by encouraging exchanges among IT experts and professionals, integrating market institutions and infrastructure networks and coordinating our respective industrial formations. Government facilitation will maximise market forces in this regard. Through these exchanges and cooperative efforts, Hong Kong, with the advantages of a well-established market mechanism, modern management and international best practices, can play a key role in speeding up Shanghai's alignment with the international market. And Shanghai, a rapidly growing economy with enormous potential and a huge demand for professional services, can benefit the economic restructuring of Hong Kong.
Finally, I want to say a few words on the current economic conditions of Hong Kong. As you know, our economy is showing definite signs of recovery, and the mood of the people has improved with the signing of CEPA. Retail sales have perked up along with the arrival of increasing numbers of visitors from the Mainland. Share prices have soared and the property market has improved thanks to a quick inflow of capital. Unemployment has begun to ease off and investor confidence is stronger. Hence, the SAR Government has twice raised its estimate of the annual growth rate. These favourable changes reflect the market's high hopes for CEPA and its conviction that the Administration is heading in the right direction. This promising trend will help boost our economic growth and improve the job market. But there is no room for complacency. The SAR Government is fully aware that there are long-standing structural problems that cannot be easily resolved. We will harness the opportunities before us to develop new points of economic growth.
On the issue of industrial restructuring, we must on the one hand upgrade the quality of the services industry to maintain our competitive edge in activities related to finance, business and other professional fields. On the other hand, we must promote industrial diversification to broaden our tax base and create a wider range of job opportunities. With effect from January 1, 2004, CEPA will allow 273 categories of Hong Kong products to enter the Mainland market at zero import tariff, and more will be added. This arrangement will undoubtedly help us attract investments in high-tech and high value-added industries, promoting our prospects for industrial diversification. By January 1, 2006, about 4,000 Hong Kong products will be enjoying duty-free access to the Mainland. I believe the Hong Kong and Shanghai governments and entrepreneurs in both cities will work together to expand the scope of cooperation, strengthening their collaboration in the financial and service industries and exploring new partnerships in high-tech and the creative industries. Hong Kong and Shanghai will pair off to fly high amid the economic advances of our nation, contributing to the well-being of the people of both cities and the prosperity of the country.
I wish the conference every success. Thank you.
End/Friday, October 31, 2003
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