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Following is the speech delivered by the Chief Executive, Mr C Y Leung, at the Luncheon of the 14th Hong Kong Forum at the Hong Kong Convention and Exhibition Centre today (December 4):
Georges, Fred, distinguished guests, ladies and gentlemen,
Good afternoon. As Georges rightly said, this is not my first participation at the Hong Kong Forum. At one of the forums which I attended, I did speak about poverty. There's a slight, subtle but important difference between poverty, which we do have, and expressing it as a wealth gap issue. We did have poverty in Hong Kong. We still have poverty in Hong Kong, and poverty alongside housing shortage, the environment, ageing society are the key policy areas that my new-term Government want to focus on. Happy to report that in the last two, three years, the income gap has narrowed somewhat, which is a result of the combination of the statutory minimum wage and also a rather reasonable or strong economy. The benefit of economic growth has filtered down to the lower strata of our income structure. Happy to see that the bottom 30 per cent of the 3.8 million-strong workforce actually received, in the past 12 months, proportionally higher income increases than the average workforce, so that's the poverty situation.
As I said, we want to address the poverty issue, the housing issue, the ageing society issue and also the environment issue, these four key issues, not so much by redistribution of income and wealth in Hong Kong or by spending government revenue per se. We want to tackle these issues by having a strong economy, and therefore I'm here and therefore the topic of my talk this afternoon.
Before I carry on, I would like to thank the Trade Development Council for hosting this event and congratulate the Federation of Hong Kong Business Associations Worldwide on its remarkable work over the years.
This Forum is one of the most valuable events of the year for Hong Kong, and I'm not simply pandering to the audience. I strongly believe that Hong Kong's greatest strength is in its ability to share its China experience and China advantage with the rest of the world, and we depend on you and your associations to communicate this strength to new investors.
To maintain Hong Kong's competitiveness and expand our city's capacity for economic development, I, together with my government Principal Officials, have been doing our best to open up the Mainland and overseas markets for Hong Kong businesses. And whenever I use the term "Hong Kong businesses", I do not just mean indigenous Hong Kong businesses. I mean Hong Kong-based businesses, which obviously include the international part of the Hong Kong business community.
Just last week I led a high-level business delegation of over 100 to the Guangxi Zhuang Autonomous Region to learn more about the opportunities there for Hong Kong investors. In September, I led a similar delegation to Chongqing and more such visits are in the pipeline, and this will include the visit to Fujian Province, which is on the Mainland side of the Taiwan Strait, in January. What's really exciting for Hong Kong, and what I see each time I visit the Mainland, is that new corridors of opportunity are constantly opening up in front of us. And that also means new opportunities for our partners around the world. During my visit to New York in June, I spoke about Hong Kong as the quickest and the most effective route to the Mainland of China for US businesses and for investors around the world. That is because Hong Kong has the best knowledge, contacts and experience to smooth the way for foreign firms to do business in the Mainland of China. And we are here to share this knowledge, contacts and experiences with you.
Apart from visits, we also spend a good deal of time and energy promoting our businesses locally. Just this Monday, I invited representatives from the Korean Chamber of Commerce in Hong Kong for a lunch at Government House, during which we exchanged views on economic and trade relations between Hong Kong and Korea. Before this, I had already invited five other foreign chambers of commerce in Hong Kong to lunches, and I will continue to do so in the coming months. Tomorrow, I will attend the opening ceremony of the Business of Design Week and the Business of Intellectual Property Asia Forum, both of which are important events for the industries and the region. Apart from attending public functions, I will also meet with the visiting dignitaries from Belgium these two days, including the Queen of the Belgians, the Deputy Prime Minister and Minister of Foreign Affairs, Foreign Trade and European Affairs of Belgium, and the Minister-President of the Government of Flanders of Belgium. This Friday, I will visit Guangzhou, Zhongshan and Zhuhai, during which I will attend the "Hong Kong-Pearl River Delta Industrial and Commercial Circle Goodwill Gathering 2013" - an annual dinner attended by over 1,000 Hong Kong industrialists - and then meet with Mainland officials.
All these go to say that we spare no effort in developing Hong Kong's economic ties with overseas economies, be they the economies on the Mainland of China or foreign economies.
I know some have speculated that the rapid rise and reform of the Mainland Chinese economy will somewhat detract from Hong Kong's competitiveness as an international business and financial centre. This is rather too simple a prediction to make, which is wide off the mark. Naturally we anticipate, and we welcome, more competition from across the boundary and elsewhere. This is the nature of the new economic order in Asia. However, China presents much more of an opportunity for Hong Kong than a challenge. In any event, Hong Kong has over the years thrived on competition and will continue to do so.
In terms of connectivity, Hong Kong's links with the Mainland of China are second to none. Going forward, we shall remain second to none because we are not complacent.
My Government is taking a more proactive role in building up our cross-boundary relationship, particularly at the G2G, government-to-government, level.
First, Hong Kong's unique free trade pact with the Mainland is a trump card for businesses to establish operations in the Mainland of China. The Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, gives Hong Kong firms and overseas companies incorporated in Hong Kong preferential treatment in accessing the Mainland markets. And let me just repeat this sentence, and this is important from your perspective. This agreement gives Hong Kong firms and also overseas companies incorporated in Hong Kong preferential treatment in accessing the Mainland markets. So the privileges under this agreement flow through to non-Hong Kong businesses incorporated in Hong Kong as well and are nationality-neutral.
This year, CEPA marked its 10th anniversary and, through annual supplements, CEPA is still the most preferential trade agreement signed by the Chinese Government. It includes over 400 services trade liberalisation measures. However, companies in certain sectors or in certain Mainland provinces are yet to fully implement the provisions of CEPA. Therefore, Hong Kong has set up a Joint Working Group with the Mainland authorities to improve the implementation of CEPA. The Joint Working Group held its first meeting in June and we will continue to liaise with our Mainland counterparts so that more businesses on both sides of the boundary can gain the full benefits of CEPA.
We also work closely with the Ministry of Finance on currency liberalisation and promoting the Renminbi as an international currency.
As China's global financial centre, Hong Kong wants more overseas investors to take full advantage of Hong Kong's leading role in China's currency liberalisation.
Allow me to briefly highlight some of the reasons why our city is the best place to conduct offshore Renminbi business.
As a pioneer of offshore Renminbi business over the past decade, Hong Kong was the first place outside the Mainland of China to launch Renminbi banking, Renminbi bond issuance and Renminbi trade settlement. Of course, we couldn't have done this without the full support and trust of the Central Government. Since 2004, and that's nine years ago, Hong Kong has accumulated the largest pool of Renminbi liquidity outside the Mainland, amounting to over RMB900 billion, including deposits and certificates of deposit. This year, the Ministry of Finance issued RMB23 billion worth of sovereign bonds in Hong Kong, including for the first time sovereign bonds open to retail subscription. Also, investment restrictions of our RMB Qualified Foreign Institutional Investor scheme have been relaxed and the quota increased to RMB270 billion.
We constantly refine our financial infrastructure to handle a huge volume of transactions smoothly and efficiently. Our RMB Real Time Gross Settlement, RTGS, system handles an average daily turnover of RMB400 billion. To meet the needs and demands of banks in Europe, we have extended the operating hours of the RMB RTGS to 11.30pm Hong Kong time.
Our Renminbi clearing platform currently includes 211 banks, including branches and subsidiaries of foreign banks and overseas arms of Mainland Chinese banks. This represents a vast global payment network that accounts for about 80 per cent of Renminbi flows worldwide.
The Renminbi is now the ninth most traded currency worldwide. This is just the beginning when you consider that China is an US$8 trillion economy with external trade flows of almost US$4 trillion, or about RMB24 trillion.
Private-sector led initiatives in Hong Kong are helping to promote Renminbi collaboration with other major financial markets, including London and Paris as well as Malaysia, Australia and Singapore. The Hong Kong SAR Government fully supports these initiatives to engage overseas partners on Renminbi liberalisation.
So please do spread the word among your associations and members that Hong Kong is the best partner for conducting offshore Renminbi business.
However, we are not placing all our financial golden eggs in one basket. Other recent developments this year include amending our tax laws to promote the development of Islamic finance in Hong Kong. We have also upgraded our trust laws to give a boost to the trust services industry here.
As an international financial centre that is consistently ranked alongside London and New York, Hong Kong regulators work hard to maintain a transparent and robust regulatory environment that is benchmarked against global standards.
None of this would be possible without the enduring success of the "One Country, Two Systems" principle of the Hong Kong SAR. Under "One Country, Two Systems" we maintain our own financial system that is separate to the financial system in the Mainland of China. We have our own currency and our own tax laws. We also have an effective rule of law and no restriction on the flow of money. In other words, we offer the combined advantages of "One Country" and "Two Systems".
Because financial services are such an important part of Hong Kong's future economic development, we have established a new expert body to advise the Government on the best way forward. I announced the launch of the Financial Services Development Council in my Policy Address in January this year. Last month, the Council published six in-depth reports on proposals to further develop our financial services industry. I have mentioned some of the focus areas today. I do hope you will take some time to study these reports to see how the proposals dovetail with your expectations of Hong Kong.
Also in January, we set up a new Economic Development Commission, which I chair. The Commission has met three times so far and provided valuable insight into the opportunities as well as the challenges for Hong Kong's future growth and prosperity.
At the same time, we will not lose sight of new opportunities emerging in the Mainland. Last month, the third plenary meeting of the Central Committee of the Communist Party of China unveiled decisions to introduce reform measures to our country's economic system, ranging from finance, tax and fiscal policy.
One major decision is to allow more private capital into the market to develop a mixed ownership economy, in which non-state-owned capital will be allowed to take equity stakes in projects featuring investment by state-owned capital. This decision unlocks great business opportunities for Hong Kong enterprises, or should I say Hong Kong-based enterprises, to explore the Mainland market.
Another major reform measure is the gradual internationalisation of the Renminbi. This would lay the foundation for the Renminbi to become an international reserve currency. As the premier offshore Renminbi business centre, Hong Kong will no doubt benefit from this internationalisation process.
Ladies and gentlemen, I have spoken today about many of the positives for Hong Kong, and I could speak on this topic for quite a bit longer. After all, we are all part of the "Team Hong Kong" when it comes to doing business, and we hope that more international companies will come to join the team.
And please remember that each of you is in a unique position to share your own perspectives on ways that Hong Kong can do better for your business associations and their members. I welcome all your ideas.
Finally, I wish you a very successful Hong Kong Forum. I also hope that our visitors will find time in their busy schedule to experience the many joys of Hong Kong and, of course, to do some duty-free Christmas shopping.
Thank you very much. Have a great day and a happy and prosperous 2014.
Ends/Wednesday, December 4, 2013
Issued at HKT 19:33
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