Following is the speech by the Permanent Secretary for Financial Services and the Treasury (Financial Services), Mr Tony Miller, at the Opening of the 8th CPA Australia Asian Regional Conference today (November 7):
Mr (David) Baulch, Ms (Sarah) McGrath, Sir Gordon (Wu), ladies and gentlemen,
It is a great pleasure to be here today to open the 8th CPA Australia Asian Regional Conference. I gather from friends and colleagues, who have attended previous gatherings, that CPA Australia Conferences are a class act and that you know how to party once the serious business is done!
To those of you who come from abroad, welcome to Hong Kong, welcome to "Manhattan with mountains". You have come to one of the great market places of the global economy, where information is shared, deals struck and the movement of capital and goods are managed. You have also arrived at the heart of the largest and most rapidly expanding economic region in the world.
China's economy is already the sixth largest in the world at around US$1.2 trillion. It has been growing at an average of 7.7% per annum for the last five years; 8% last year; and shows no signs of slowing. As a producer, it is radically altering the economies of scale, in ways that are making an enormous range of modern goods affordable to people who 10 years ago would never even have dreamed of using such things as mobile phones and DVD players. As a consumer, what was once termed the "mythical market of one billion" has already become a voracious reality.
The impact is nowhere more visible than in regional trade flows. Intra-regional trade has more than doubled over the last decade, from US$375 billion to US$775 billion. The best news is that the pie is growing so fast that even with changing shares everybody gets a bigger slice.
We are certainly not grumbling about our share. Last year our port handled 19 million containers (TEUs), more than treble, yes treble, the number of only 12 years ago. Add another 10 million to that to get the total for the delta as a whole. Our spectacular airport at Chek Lap Kok is not just a pretty face: it is the world's biggest in terms of air-freight and last year handled 2.5 million tonnes of cargo. This included exports valued at US$50 billion; only 1.6% of our total by volume, but nearly 25% by value.
The Pearl River Delta is China's wealthiest and fastest growing region. Hong Kong in turn is the Delta's commercial and financial services hub. Roughly 270 million people live within one hour's flying time of Hong Kong, nearly the same as the entire population of the US. Guangdong Province by itself is slightly larger than the United Kingdom and has a population of around 82 million. Just over half of that population, 42 million people, live in the Pearl River Delta, not counting Hong Kong's 6.8 million.
If you want to be a "hub" you have to build the "spokes" and that is precisely what we are doing. Your key-note speaker, Sir Gordon Wu, was one of the few with both the vision to see what needed doing and the guts to get it done. At a time when our border with the mainland was still virtually sealed, he staked everything on building the super highway, which now links Hong Kong with Guangzhou. Where would we be without it?!
Since then things have improved, not as fast as Sir Gordon would like, but the infrastructure, which will knit the whole delta region into a complementary conurbation, is now well in hand. Where once there was only the rail-link, today we are spoilt for choice: travel by air, sea or land; plane, high-speed ferry, trains, coach or car. The border is now open 24 hours a day. Agreement was finally reached earlier this year on construction of the key, missing piece of infrastructure, the bridge across the estuary to link Hong Kong's "Manhattan" to its neighbouring "New Jersey" shore.
China's opening up has required a massive adjustment to Hong Kong's economy. This has been painful, but it has kept us competitive. Gone is the light manufacturing miracle of the fifties and sixties. In its place is a predominantly service sector economy. Services now account for around 87% of our GDP; financial services, logistics, tourism and professional and producer services account for more than half. All are externally oriented and are the focus of our drive to add value by improving speed, quality and creativity, as we adjust to the huge opportunities north of the border. Financial services provide a particularly good example of our strategy.
Once China re-opened to the world, Hong Kong became the obvious place to raise funds for Mainland enterprises. Many of you will be familiar with the growth of this business and the crowning success in July last year, when the Bank of China listed in Hong Kong, raising US$2.5 billion in the process. This type of fund-raising is a win-win. On the one hand, Hong Kong's market is deep and mature. On the other, the need to comply with an effective and respected regulatory and corporate governance regime, and follow international legal and accounting standards, provides a quality stamp, which can boost investor confidence. "One Country, Two Systems" not only works, it generates win-win situations for both.
But enough from me. You have the broad picture; it is one of enormous opportunity. If you want a slice of the action, if you are not totally risk-averse, this is the place to be. It gives me great pleasure now to open this conference and to wish you all a most productive couple of days. To those of you from overseas, thank your for coming, enjoy your stay, try to find time to see more of Hong Kong than just the shopping centres, but if you have to choose spend first and sightsee later, and please come again. You will always be welcome.
Ends/Friday, November 7, 2003