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Following is the speech by the Chief Executive, Mr C Y Leung, at a business luncheon in Brussels, Belgium, today (May 15, Brussels time):
Thank you very much, Mr Steel. Distinguished guests, ladies and gentlemen,
Thank you very much for your warm and sunny welcome. Thank you for arranging the weather for me. Great pleasure to be with you in Brussels.
Brussels is an important part of the big international picture, not just as the European Union's de facto capital city, but also as a linkage point between Europe and our neck of the woods in Asia.
Our Hong Kong Economic and Trade Office in Brussels serves as Hong Kong's "Head Office" in Europe, and the Belgium-Hong Kong Society has been promoting strong bilateral business relations since 1986.
As Chief Executive of Hong Kong, this is my first official visit to Brussels. I arrived here yesterday after visiting Sweden. Later today, I will depart for Hong Kong and will soon begin preparing for my next trip to other countries in Europe.
I enjoy travelling. However, a busy travel schedule can have minor complications. For example, before I leave home, I have to carefully check which electrical adaptor is required for sockets in different countries, so that my handphone and laptops will continue to work. Now, you may have had a similar experience. Thankfully, my wife recently bought an ingenious all-in-one adaptor. At the flick of a switch, it transforms to fit any style of electric socket in the world. Problem solved.
This also got me thinking about Hong Kong's versatility in connecting the rest of the world to the Mainland of China. Hong Kong is where different systems, different languages and different cultures come together in one place, what we call Asia's world city.
In a way, Hong Kong serves as a multiple adaptor that helps companies from Europe and around the world to plug into the huge opportunities in the Mainland of China and further afield across Asia.
Hong Kong's versatility as a city in China but outside the Mainland is one of the great strengths of our city. Since Hong Kongˇ¦s return to China in 1997, our city has thrived under the principle of "One Country, Two Systems". Under this unique formula, Hong Kong has retained its tried and tested capitalist system including its own financial and legal systems separate to those in the Mainland of China. Both English and Chinese are official languages in Hong Kong and most residents are bilingual or trilingual.
This makes Hong Kong a familiar and highly efficient location for international entrepreneurs and investors to plug into the business networks in Mainland China, to reach Chinese investors and to access the vast Mainland Chinese markets.
First, financial connectivity. In Hong Kong, we have our own currency, the Hong Kong dollar. The Hong Kong dollar is fully convertible and we don't impose any restrictions on the flow of capital. We also have a huge cluster of global finance firms in Hong Kong, including all the big banking, insurance and investment companies.
Today, Hong Kong is a major global financial centre in the Asian time zone. Hong Kong ranks third behind New York and London in the Global Financial Centres Index. Equally important for us, we serve as the international financial centre of China.
Over the past decade, Hong Kong has played a leading role in the Central Government's financial and currency reforms. Since 2004, Hong Kong has served as the testing ground for launching offshore Renminbi financial products and services, most notably offshore Renminbi banking, bond issuance and trade settlement.
Hong Kong has become a leading global financial centre in the Asian time zone that is fully plugged into the international financial system and to the financial system across the boundary in the Mainland of China. We have the largest pool of Renminbi liquidity outside of the Mainland amounting to more than RMB1 trillion in deposits and certificates of deposits. According to latest figures, there have been more than 380 Renminbi bond issuances in Hong Kong since 2007, mostly by Hong Kong and overseas non-financial companies. Hong Kong's Renminbi clearing platform handles about 70 per cent of total Renminbi deposits and payment transactions globally.
Internationalisation of the Renminbi is perhaps the most important trend for global finance in the post-financial crisis era. Hong Kong serves as an all-in-one adaptor connecting Chinese and international financial markets.
In terms of value, the Hong Kong Stock Exchange is the second largest bourse in Asia and sixth largest in the world with market capitalisation exceeding US$3 trillion. A recent financial initiative announced by the Chinese Central Government last month is to establish a link between the Hong Kong and Shanghai stock exchanges. The so-called Shanghai-Hong Kong Stock Connect enables investors in Hong Kong and Shanghai to trade shares in each other's market. This is a highly significant development that benefits Hong Kong and the Mainland. It paves the way for Chinese investors to diversify their portfolios outside the Mainland via Hong Kong. It is also a new way for Hong Kong to contribute to our nation's financial reform and the internationalisation of the Renminbi by leveraging on, again, the "One Country, Two Systems" formula.
Hong Kong is also a highly efficient connector for corporates to plug into the business opportunities in the Mainland of China and Asia.
Our common law system is underpinned by an independent judiciary. We have a robust intellectual property rights regime and strong information communications technology. Hong Kong is a safe and law-abiding city that serves as a familiar platform for foreign firms to establish a base in Asia.
At the same time, Hong Kong has decades of experience in doing business with our partners just across the boundary in the Mainland of China. Hong Kong people understand the language, the culture and the way of doing business in Mainland China. In other words, Hong Kong is the "Chief Knowledge Officer", or CKO, for foreign companies doing business in the Mainland of China.
Ladies and gentlemen, Hong Kong is a highly open and versatile economy that is open to ideas and that welcomes people from around the world with open borders, open markets and, more importantly, open minds. We know from experience that business opportunities shared with international partners will bring more opportunities.
Hong Kong continues to be ranked as the world's freest economy by both the Heritage Foundation in the US and the Fraser Institute in Canada. We maintain a low and simple tax system with no inheritance tax and no capital gains tax. We enjoy free flows of money and information and we have a liberal immigration regime that attracts talent from around the world.
I invite you to make best use of Hong Kong's advantages and familiar environment for businesses to plug into the huge opportunities in the Mainland of China, and across the whole of Asia.
Thank you very much.
Ends/Thursday, May 15, 2014
Issued at HKT 21:12
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