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Following is the speech by the Chief Executive, Mr C Y Leung, at the Boao Forum "Hong Kong SAR Dinner" in Boao, Hainan today (April 6):
Distinguished guests, ladies and gentlemen,
Good evening.
I am very pleased to have this opportunity to speak about Hong Kong under the theme of this year's Boao Forum, "Asia Seeking Development for All".
This theme is especially appropriate for Hong Kong. We are a city with few natural resources of our own. Our development and prosperity depend on the sustainable growth of Asia. Throughout our history, Hong Kong has dedicated itself to promoting development for all; development for Hong Kong, for our motherland and for our overseas partners.
Throughout our history, Hong Kong has maintained an open border, welcoming government policy and above all, an open mind. We share opportunities with other economies because we know that, by doing so, we create more opportunities for further development for each other. We believe in sharing. We practice sharing and we experience the benefit of sharing with Asia and beyond.
When the word "globalisation" was coined, the notion was seen as a new challenge to many economies. To us in Hong Kong, it had always been our way of life. From our local small trading companies to multi-national firms, businesses in Hong Kong are always outward looking. Because we are outward looking, we are at the same time forward looking - looking ahead to forging new ties and removing barriers.
Over the years, Hong Kong has evolved as an efficient international gateway both into and out of the Mainland of China. This is good for Hong Kong, for the Country and for foreign countries. But just serving as China's gateway to the world is no longer good enough. Times are changing. The greatest economic transition in the world over the past 30 years has been China's opening up. Hong Kong rose to the occasion and transitioned into a new role ˇV as a connector between our country and the international community. That means making the most of our strategic advantages and finding new ways to promote the flow of people, capital, goods and services, ideas and information.
Another change for us all is the growing competition in Asia and around the world to enter the China market. The "Made in China" label is fast being replaced by "Bought in China". No doubt this trend will continue given our nation's increasing prosperity, urbanisation and growing stature on the world stage.
A more recent development has been the global economic swing in favour of Asia. Seeking development for all is not about grabbing a greater share of whatever market, instead we need to grow larger markets by diversifying the range and expanding the depth of economic activity in Asia.
All these add up to a good deal of challenge and opportunity, which brings me to the main part of my talk today, namely, Hong Kong's position as a connector in Asia, linking the region on different levels; people-to-people, or P2P, business-to-business, or B2B, and government-to-government, G2G levels.
Only with more joined-up growth can our region fully grasp the opportunities that are presenting themselves. Only with a greater understanding of each other's strengths and weaknesses can we become a more competitive region. Only through closer co-operation can we hope to achieve Asia's full economic potential in the 21st Century.
What is Hong Kong's role in forging closer regional integration and co-operation?
Hong Kong's international trade links have always been our economic DNA. This DNA has shaped our growth into a top class international business and financial centre. It will continue to guide us in our future growth.
In terms of economic opportunities, Hong Kong is fortunate to be in the right place at the right time. But our development is not simply a happy coincidence.
We have always invested heavily in infrastructure development to turn our land into a highly efficient international logistics centre in the dynamic Pearl River Delta (PRD) region. Today our seaport and airport are among the busiest in the world. Between our stock exchange building which is in the heart of our financial district, and our international airport almost 40 kilometres away, there is only one set of traffic lights. The same goes for the border with Shenzhen, which is 40 minutes away by car and Shenzhen is the richest city on the Mainland in terms of GDP per capita. Major new projects are coming on stream at regular intervals. In particular, we look forward to a positive impact from the 42-kilometre long Hong Kong-Zhuhai-Macao Bridge which is commissioned in 2016.
We also invest in our people through education, job training and lifelong learning. We invest in enticing the best and the brightest to join us. We invest in Hong Kong's reputation overseas through various visits to, and exhibitions in major cities around the world.
We have a vested interest in protecting Hong Kong's core values of the rule of law, independent judiciary, clean government and in maintaining and respecting our cherished freedoms in terms of both our personal freedoms and our economic freedoms. We know the importance of a free flow of information to our life style and to our economy. We therefore have an entirely free and lively press.
These are some of the ingredients that make Hong Kong an efficient and reliable connector in our region.
I shall now briefly discuss five main areas where Hong Kong can blend these ingredients more closely together for the sustainable development not just for Hong Kong, but for our partners in Asia and beyond.
First, Hong Kong has always been a Chinese society with its own unique characteristics and history. Throughout our recent development, our links with the Mainland of China and our understanding of the Mainland, have been critically important factors. This importance is now more obvious. Today, our internal relations, or Nei Jiao, with our motherland under the principle of "One Country, Two Systems" hold huge promise for Hong Kong and for our role in our country's development. It also holds huge promise for our partners who come to Hong Kong for the connectivity.
Last month I visited the northern port city of Tianjin. In the next few months, I shall visit three other major cities in the Mainland of China. Also I shall receive many trade and investment promotion delegations from the Mainland cities. At my suggestion, foreign chambers of commerce in Hong Kong will be invited to meet with these Mainland Chinese delegations - a way to share opportunities with foreign businesses in Hong Kong. It is also a way to underline our connector capabilities.
We will step up our efforts to enhance our connections in different cities to open the door for new opportunities both for Hong Kong and for our counterparts across the country. After all, Hong Kong is second to none in the world in terms of business proximity to the Mainland of China. We have a wealth of experiences. We share the same language and the same culture as other Chinese cities. We also share the same passion and the same desire to see the country develop through international collaboration. The shortest line between the Mainland of China and the rest of the world is via Hong Kong. We know this and our partners in the Mainland know this.
This brings me to my next point. Effectively connecting China to the world is not a one-way street. It is more like a two-way super-highway for capital, goods and services, information and ideas. So after internal relations, my second point today is our external relations, or Wai Jiao.
Hong Kong has always been an externally-oriented city, especially in terms of our economy. We are an international city with both English and Chinese as our official languages. Bilingualism is not only stated in the Basic Law, our mini-constitution, it is practiced day in and day out on the streets and in high-rise offices. About 50 international schools operate in Hong Kong. People from around the world come to live and work in Hong Kong, and to experience the very open nature of our city.
Under the "One Country, Two Systems" principle and in accordance with the Basic Law, Hong Kong may on its own, using the name "Hong Kong, China", maintain and develop relations and conclude and implement agreements with foreign states and regions and relevant international organisations in the appropriate fields, including the economic, trade, financial and monetary fields, just to name a few.
We will expand our network of free trade agreements with trading partners in Asia and around the world. There are around 7 250 firms from the Mainland of China and overseas operating in Hong Kong. Many of them, in fact more than half of these companies, use Hong Kong as a base for their regional offices or regional headquarters.
We will reach out further to the international community to promote trade and investment with different economies, especially those in Asia as well as emerging economies with great potential for us to forge stronger connections.
One way to achieve stronger links is through various free trade accords. Our first such agreement with a foreign economy is a Closer Economic Partnership Agreement with New Zealand which came into force in January 2011. We also signed a Free Trade Agreement (FTA) with Chile in September last year. And late last year an FTA between Hong Kong and Member States of the European Free Trade Association (namely, Norway, Switzerland, Iceland and Liechtenstein) came into force.
Currently, we are also working to enhance our economic relationship with the ASEAN market.
We are expanding our network of comprehensive double taxation agreements, CDTAs, with our trading partners around the globe. So far we have signed 27 CDTAs with different jurisdictions that promote our trade and investment links in different countries.
Closer to home, we have the Co-operation Framework Agreement with Guangdong, one of the most prosperous provinces in China, to promote joint socio-economic development and to create a world-class economic zone.
At the same time, the Chinese Central Government, has adopted the "early and pilot implementation" approach in Guangdong Province to improve the service industries'access to the Mainland market. This policy has proved successful in assisting Hong Kong in better capitalising on the advantages as a platform to provide funds, talents and technology to the Mainland. I have proposed to the Central Government expanding this approach beyond Guangdong Province to include the eight provinces and the autonomous region of Guangxi that comprise the Pan-PRD region. The aim is to speed up procedures and improve the success rate of new ideas and programmes taking root across the country.
After our internal relations and external relations, a third element of our connector role is information. By that, I refer to Hong Kong being the Chief Knowledge Officer, or CKO, of China.
Providing support to the thousands of foreign companies in Hong Kong we have many business chambers and organisations that represent different sectors and different countries. We also have around 130 foreign diplomatic missions in Hong Kong which is among the largest foreign representation of any non-capital city in the world.
On the one hand Hong Kong is a great place from which these organisations, chambers and missions can keep their finger on the pulse of economic developments around the region. At the same time, information in Hong Kong does not stay just in Hong Kong. It is spread quickly via different channels to business people around the world who can then make timely and informed decisions.
Companies from across China can come to Hong Kong for all the information and contacts they need to do business in countries around the world. They can learn from our experiences to make the most of their opportunities to "go global".
Just last month, our inward investment agency, Invest Hong Kong, held a seminar in Wuhan, in the middle part of China, highlighting Hong Kongˇ¦s business-friendly environment and international links. The seminar was designed to encourage companies in Wuhan to leverage on Hong Kong's strengths as an international business and financial centre to "go global" and reach out to new markets and investment opportunities.
In the other direction, Hong Kong has built up a huge knowledge bank about nearly all the economic sectors of China, be it real estate, trade, finance or manufacturing.
Moving on to the fourth area where Hong Kong is a great connector in the region, namely financial connectivity. In particular, Hong Kong is the testing ground for the internationalisation of the Chinese currency, the Renminbi. Liberalisation of the Renminbi is a natural and inevitable extension of our country's position as the fastest growing large economy in the world.
The National 12th Five-Year Plan which was announced two years ago highlights Hong Kong's important role as the main offshore centre for Renminbi business.
Steady and gradual steps have been taken since 2004, and that's nine years ago, to promote the Renminbi as an international currency. At each stage of the liberalisation process Hong Kong has been a focal point, given our freely convertible currency, mature financial services industry and transparent regulatory regime.
Today, Renminbi banking, bond issuance and trade settlement are among the most important trends in international finance. There is still a long way to go in promoting the Renminbi as an international currency and introducing new RMB-denominated financial products. Recent developments include the first RMB Gold ETF launched a year ago as well as the first listed RMB sovereign bond. Last July we saw the first RMB Qualified Foreign Institutional Investor (RQFII) A-share ETF and last September the world's first deliverable RMB currency futures were launched by the Hong Kong Stock Exchange.
Developing a wider range of RMB-denominated products would benefit both Hong Kong and the Mainland in the process of RMB internationalism.
Last month, the China Securities Regulatory Commission released the revised rules for the RQFII pilot scheme. Under the revised rules, Hong Kong subsidiaries of Mainland commercial banks and insurance companies or financial institutions which are registered and have major operations in Hong Kong can apply for the scheme.
We will continue to work closely with the Central Government to strengthen our market infrastructure, and connect with other financial centres around the world to promote the use of Renminbi globally.
We have around 70 of the world's largest 100 banks operating in Hong Kong. Over 200 banks participate in the Renminbi clearing platform in Hong Kong.
As intra-Asia trade continues to grow, we expect Hong Kong to become a more prominent international financial gateway to the Mainland of China.
My fifth and final point today is about promoting barrier-free trade in our region. You would expect the Chief Executive of Hong Kong to highlight this point, as we are the world's freest economy.
We will nurture the free trade privileges that Hong Kong enjoys with the Mainland of China under the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA. This is a special arrangement to promote the joint prosperity and development of Hong Kong and the rest of our country.
CEPA has been expanded each year since its launch in 2003. A decade on, CEPA now covers 48 services sectors. It also enables tariff-free entry of products to the Mainland, as long as they meet fairly straightforward rules of origin criteria. Foreign firms incorporated in Hong Kong can also enjoy the benefits of CEPA.
We will establish a working group with the Ministry of Commerce in Beijing to improve the implementation of CEPA. That way, all sides, including Hong Kong firms, Mainland businesses and foreign companies, stand to gain a greater advantage from this arrangement.
Ladies and gentlemen, Asia is a continent of contrasts. The peoples of Asia have very different culture, languages, religions and political systems. But we share a common goal of advancement. We also share a common experience. Asians in my generation have personally experienced rapid developments in practically all corners of this huge continent. Nearly 40 years ago, as a student, I flew from Hong Kong to London. The air space at that time of the Mainland of China was closed. So was for obvious reason the air space of Vietnam. The flight headed south for the South China Sea, wrapped around the coasts of Vietnam, only to turn north to land in Bangkok as the first transit stop. The next stop was Karachi in Pakistan. That 24-hour flight gave me some unforgettable benchmarks about Asia of the 1970s.
Asia has come a long way since the 1970s. Peace and stability have brought development and prosperity. For the next 40 years, the new generation after us will need more peace and stability to bring about more development and more prosperity. They will need more collaboration and sharing. To do this, we in Hong Kong shall have to remove more barriers in the region, be they physical, political or economic. Hong Kong stands ready to share our experience in building a barrier-free economy.
This Boao Forum for Asia was inaugurated in 2001, to promote integration and co-operation within our region.
Hong Kong expects the trend of integration and co-operation to continue to the benefit of all. My government will continue to develop strong internal relations within China and foster our external relations outside it. We will share our knowledge bank of information and we will promote financial and trade liberalisation. We shall contribute unreservedly to the integration of this region and seek development for all in the region.
Thank you very much.
Ends/Saturday, April 6, 2013
Issued at HKT 22:02
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