Email this article
SCED's speech at symposium of "The Chinese World IV - Emergence, at the Crossroads" (English only)

    Following is a speech given by the Secretary for Commerce and Economic Development, Mr Frederick Ma, at the Symposium of "The Chinese World IV - Emergence, at the Crossroads" organised by the French Chamber of Commerce and Industry today (October 22):

Herve (Novelli) (French Minister for Companies and Foreign Trade), Richard (Burton) (President of the French Chamber of Commerce and Industry in Hong Kong), distinguished guests, ladies and gentlemen,

     I am delighted to join you today. A warm welcome, especially to those of you who have travelled half way around the world to be here. And welcome back to those of you who attended the last Chinese World Symposium here four years ago. You may have noticed that Hong Kong is very different today than in 2003.

     The title of this symposium, "Emergence, at the Crossroads" is indeed appropriate for both Hong Kong and our nation. As for Hong Kong, we have emerged in pretty good shape from some turbulent times in the past decade. And we are now embarking on a new and exciting journey. I am pleased the French business community will be coming along for what promises to be quite a ride.

     In fact, this is a busy week with not one but two major French business conferences here, the other being the Hong Kong-France Business Partnership Plenary session tomorrow. And last month we hosted the Paris Europlace Financial Forum, so we must be doing something right!

     Today, I want to tell you why I believe your confidence in Hong Kong is well placed and what we are doing to help you grow your businesses in our part of the world.

     First a flashback to 2003 when we were just getting over the challenges of the Asian financial crisis and the SARS outbreak.

     In October, 2003, our stock market was hovering around 12,500 points with daily turnover of around $13 billion. Our unemployment rate was 8% and we were just entering a sixth consecutive year of deflation. The housing market was just starting to get back on its feet, but there were still almost 100,000 people holding negative equity. This, naturally sapped consumer confidence.

     Fast forward to today. Our stock market is trading at record high levels. Last week it broke through the 30,000-point level for the first time, and average daily turnover last month was almost $110 billion. More people have jobs now than ever before, the work force is over 3.5 million-strong while unemployment is down to 4.1%. As of June this year there were less than 4,700 cases of negative equity. Deflation is a distant memory. Our full year inflation forecast for 2007 is modest, at between 1.8 and 2%. And we expect our economy to expand between 5 and 6% this year. The high-growth, low-inflation trend in recent years is the best economic performance in recent history.

     So we are in pretty good shape today, and we are pretty confident about the future. Let me tell you why.

     Earlier I mentioned a "new journey". You may well ask what's wrong with the one we are on at the moment? Well, not much. But given our economic and business environment today we have the potential, together with the financial resources, to achieve more than we thought possible even just a few years ago.

     Above all we have a unique and irreplaceable dual role to play as a centre for international business and as China's global financial centre. This was reaffirmed last year when Hong Kong was included in our nation's economic blueprint, the 11th Five Year Plan, for the first time. We now have a clear picture of what our nation expects from us in servicing the Mainland. We also know that to play that role we need to sharpen our competitiveness as an international city.

     A priority is to enhance Hong Kong's reputation as the preferred platform for overseas enterprises to launch into the Mainland markets. I am pleased to see that French enterprises are involved in our free trade agreement with the Mainland, which we call the Closer Economic Partnership Arrangement - or CEPA for short. It gives enterprises supra-WTO access to Mainland markets, providing enhanced co-operation, tariff-free trade and mutual recognition of qualifications.

     Currently 27 service sectors are covered by CEPA including banking, accounting, insurance, tourism, legal, logistics, and convention and exhibition services. Another 11 sectors will be added from the start of next year bringing the total to 38.

     Because we have a nationality-neutral policy, foreign companies based in Hong Kong are also able to enjoy the full benefits.

     By the end of last month some 1,053 service sector companies had signed up to CEPA. According to our estimates, about 480 of these are headquartered overseas, including 129 in the European Union, of which 24 are from France. We welcome more French firms to take advantage of the preferential free-trade pact.

     CEPA applies nationally, to all of China and its potential 1.3 billion customers, many of whom are becoming wealthier on the strength of our nation's prolific economic growth. President Hu Jintao said last week that he expects per capita GDP to quadruple by 2020 against 2000 to about US$3,000. That is good news for Hong Kong because what any externally oriented economy like ours wants is a growth market nearby.

     So how are we going to bridge our neighbouring provinces to the outside world?

     Our Chief Executive announced in his Policy Address earlier this month that he would push ahead with a series of major infrastructure projects to make it easier and quicker to move people and goods around the region. These include a rail connection between Hong Kong International Airport and Shenzhen Airport and a high-speed rail link with Guangzhou. The biggest project of all is a 35-kilometre bridge linking Hong Kong, Zhuhai and Macau that will further open up the industrial hinterland in the western Pearl River Delta.

     In our dual capacity, we are not only a major facilitator of cross-boundary trade but also the nation's banker. As China's global financial centre we are making progress in dovetailing the infrastructure of our two financial systems.

     This year Hong Kong became the first place outside the Mainland to possess a Renminbi bond market. So far three institutions, the Bank of China, the Export-Import Bank of China and the China Development Bank have launched Renminbi bond programmes worth a total of 10 billion yuan. We are also expanding the Qualified Domestic Institutional Investor scheme known as QDII to enhance the outflow of capital from the Mainland. The China Banking Regulation Commission announced in May this year that it would offer qualified institutions a wider range of investment choices including equities and some equity funds.

     Ladies and gentlemen, our efforts to unleash the enormous business potential in our part of the world are bearing fruit, according to the United Nations' World Investment Report released last week. The report showed that Hong Kong attracted foreign direct investment (FDI) worth almost US$43 billion (HK$334.6 billion) last year. That's an increase of 28% compared to 2005. Only the Mainland, with US$69 billion (HK$538 billion) of FDI in 2006, ranked higher in Asia. Put together, Hong Kong and the Mainland accounted for more than half the FDI inflows into this region.

     I believe this highlights Hong Kong's importance as an international centre in Asia for overseas companies and capital. It also shows that you are in the right place, at the right time to grow your business.

     Thank you.

Ends/Monday, October 22, 2007
Issued at HKT 10:05


Print this page