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Following is a speech by the Chief Executive, Mr Donald Tsang, at a reception hosted by the Council on Foreign Relations in New York today (November 7, New York time):
Distinguished guests, ladies and gentlemen,
Thank you for this chance to meet and speak with you all today.
I'd also like to thank the Council for its keen interest in Hong Kong. Over the years the Council has analysed Hong Kong's return to Chinese sovereignty, our role in public health issues, the SARS epidemic, our education system, our ongoing democratic reforms as well as economic and financial developments. All the while, the Council has given full play to our city's role in the international arena.
In our world of 10-second sound bites, tweets, SMS and e-mail, this Council proves that there is no substitute for informed and comprehensive debate and analysis.
And that is why I am especially delighted to have this opportunity to talk to you about Hong Kong's unique role in today's world and, I believe, in the future relationship between the world's two largest economies, the United States and China.
As you may know, my administration is in its final year. I have the honour of serving as Chief Executive of the Hong Kong Special Administrative Region of China since 2005. We will hold Chief Executive Elections in March next year and my successor will come into office on July 1 next year. For the remaining eight months of my term, there is much work for me to do.
Considering the changes our city has been through in the past 14 years – economic changes, political changes, legal changes, social changes, and more - Hong Kong has remained on a remarkably even keel.
Remember, that during this period, we have faced not one but two financial turmoil, the Asian Financial Crisis in 1998 and the yet to finish global financial tsunami which started in 2008. Our economy was also hit hard by the fallout from the bursting of the dot.com bubble at the turn of the century. We have overcome health scares including the SARS outbreak in 2003 and several bouts of Avian Flu and Swine Flu.
To borrow an overused but apt phrase - it has been a period of challenges and opportunities. Our weaknesses have been exposed, our friendships put to the test and our strengths have come to the fore.
Above all, we have all come to understand more about the role our city can, and will play in the development of our nation. This deeper understanding and mutual trust and respect between Hong Kong and our sovereign is underscored in the National 12th Five Year Plan - the Central Government's development blueprint which was adopted earlier this year.
The 12th Five Year Plan pledges to maintain Hong Kong's stability and prosperity under the principle of "One Country, Two Systems". The Plan also supports our development as China's international financial centre and as a global hub for trade, shipping and asset management.
Under "One Country, Two Systems", Hong Kong people run Hong Kong in much the same way as they always have done. We have a high degree of autonomy including managing our own legal system, financial system and political system as well as individual policies on immigration and social development.
Hong Kong still plays a full and separate role in various international fora - among them the WTO, WHO, APEC and the World Customs Organization. Our city also remains a popular port of call for the US navy.
All this has enhanced Hong Kong's reputation as a stable, reliable and trusted partner both for our friends around the world and for our own nation.
According to our inward investment agency, Invest Hong Kong, the number of companies from Mainland China and overseas operating in Hong Kong has reached an all time high of almost 7,000 firms.
More companies from the US than anywhere else have their regional headquarters or regional offices in Hong Kong, the last count was 315 headquarters. These companies bring investment, enterprise, talent and good old American values to our city.
The top five reasons for overseas companies choosing our city are: low and simple tax system; free flow of information; corruption-free government; absence of exchange controls and strong network of soft and hard infrastructure.
These attributes, underpinned by "One Country, Two Systems", are the foundation of our role as a gateway into and out of Mainland China. A gateway not only for business, finance and investment, but also a two-way flow of people, ideas, innovation, creativity and culture.
Allow me to give you an idea of the size of this gateway. Hong Kong with a population of just seven million - is the single largest investor in Mainland China while the Mainland is the largest investor in Hong Kong. In 2010, we received a record of almost US$70 billion worth of Foreign Direct Investment inflows. This was the third highest behind the United States and Mainland China in the world. And remember, we are just a small territory of seven million people according to the UNCTAD World Investment Report 2011.
And imagine this... on an average day more than 600,000 people cross by land, sea and air between Hong Kong and Mainland China. That is about double the number of daily crossings between the United States and Canada. Also in Hong Kong, more than half a million people travel to and from across our seven land boundary points daily.
My administration is investing heavily in infrastructure, including mega cross-boundary infrastructure projects. Among these are a 29-kilometre bridge linking Hong Kong with less developed parts of the dynamic Pearl River Delta Region, and an Express Rail Link that will connect Hong Kong to the Mainland's vast high-speed rail network.
Our cross-boundary gateway is expanding rapidly, and the United States is right in the thick of the action. The United States was our second largest trading partner and export destination last year. At the same time, Hong Kong was the United States' 12th largest export market.
Last year, about 12 per cent of trade between the United States and Mainland China, valued at US$46 billion, was routed through Hong Kong. Despite the global economic turmoil, our bilateral trade last year grew 20 per cent year-on-year to reach US$66 billion.
The point is that Hong Kong's door to the Mainland is efficient, mutually beneficial and wide open.
In his State of the Union address last year, President Obama set up the National Export Initiative or NEI. The NEI is designed to help the US meet its export goals. It recommends deepening United States trade ties with high-growth markets including Mainland China as well as with other emerging markets in Asia. We see tremendous opportunities for both Hong Kong and US entrepreneurs arising from this initiative.
The NEI Report noted cultural differences and market access barriers as obstacles to achieving these goals, then enter Hong Kong. For one thing, we are the world's freest economy. We have been ranked number one by the Washington DC-based Heritage Foundation for each of the past 17 years. We are also a close and familiar friend of the United States business community. We speak the same language, share the same values and we have similar aspirations for our communities.
With this in mind, the Hong Kong Trade Development Council, or HKTDC, has launched a "Pacific Bridge Initiative". The initiative promotes Hong Kong as a springboard for US exporters to reach Asian markets and particularly Mainland China. In November last year, the HKTDC and the US International Trade Administration signed the "Pacific Bridge Initiative Statement of Intent". It was the first such initiative between the US and its trading partners to bolster the NEI.
As well as having a dynamic business-friendly environment, Hong Kong has a unique free-trade pact with the Mainland, what we call the Closer Economic Partnership Arrangement, or CEPA. In fact, it is the only example a city having such an arrangement with its sovereign - another positive outcome of the "One Country, Two Systems" formula.
CEPA was signed in 2003 and remains the most preferential free trade initiative ever signed by the Mainland China. Under CEPA, all products of Hong Kong origin are exempted from tariffs when entering the Mainland market. It also gives companies the first-mover advantage and preferential access to 44 services sectors throughout Mainland China.
Important for US companies, CEPA is nationality neutral, which means American firms and companies around the world that are incorporated in Hong Kong, can enjoy the same benefits as local firms. Our overriding goal is to basically achieve full liberalisation of trade in services between Hong Kong and the Mainland by 2015.
Ladies and gentlemen, these are some of the ways that Hong Kong is continuing to firm up its platform as a premier gateway to the Mainland.
During my term as Chief Executive, and especially in recent years, I have witnessed changing aspirations of our people, and especially our younger generation. Jobs, good salaries and home ownership are still important. But the counterbalance has shifted, giving much more weight to issues such as the environment, corporate transparency and accountability, and democratic reforms.
As an accountable government, my administration works hard to stay abreast of this trend.
On the key issue of political reform, we have mapped out a clear timetable for universal suffrage which means that Chief Executive in 2017 and our entire legislature in 2020 may be returned by universal suffrage - one man, one vote.
This goal has the full backing of the Central Government because, in fact, they set the timetable after the HKSAR Government asked them to consider doing so to help push forward our political development. It is another example of the successful implementation of "One Country, Two Systems".
Ladies and gentlemen, I thank you all for your interest in Hong Kong. Beyond promoting two-way trade and investment, I am confident that Hong Kong has what it takes to lift our bilateral relations to the next, more interconnected, level.
Each of our communities will gain from healthy competition, positive engagement and mutual trust - not to mention a generous helping of the "can do" spirit which we all share.
Thank you very much.
Ends/Tuesday, November 8, 2011
Issued at HKT 10:35
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