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Following is the speech by the Financial Secretary, Mr John C Tsang, at the WirtschaftsWoche Hong Kong Dialogue in Dusseldorf, Germany, today (September 25, Dusseldorf time):
Distinguished guests, ladies and gentlemen,
Good morning.
It is my great pleasure to be here in Dusseldorf. A city that is rich in history, rich in the culture of music, literature, art, film and, of course, the altbier (old beer). A city that is also blessed with the Heinrich Heine Institute, the Goethe Museum, the Robert Schumann Saal and the Altstadt, or old town, which enjoys a deserved reputation as home to the "longest bar in the world".
All good reasons, I'm sure, behind Dusseldorf's lofty place in this year's Mercer Quality of Living rankings. Yes, Dusseldorf finished sixth out of more than 200 global cities.
Of course, I am here, leading a high-level Hong Kong business mission, to sample more than your city's famed top-fermented beer, though that does seem reason enough, especially paired with a curled bratwurst and a flourish of mostert (traditional mustard).
Beyond the beer and bratwurst, we're here because of Dusseldorf's standing as a city of commerce and trade. A magnet for more than 5 000 international companies. A metropolis at the heart of Europe, with more than 150 million people living within a radius of 500 kilometres. That, I'm told, takes in nearly one-third of the European Union's population and half of its purchasing power.
We're here because Hong Kong and Dusseldorf have a good deal in common. Your glittering Rhine reminds me of Hong Kong's Victoria Harbour. Indeed, our two global cities began as humble fishing villages before turning to trade, industry, logistics and telecommunications, before attracting a world of business.
And now there's even more to bring us together. Yesterday evening, we celebrated the formal launch of Cathay Pacific Airways' direct passenger flights between Hong Kong and Dusseldorf. Direct flights make business and leisure travel much easier. And I'm confident they will boost exchanges between us - in business, people, ideas, culture, travel and beer, too.
Excellent reasons for us to be here today, to be looking to Dusseldorf as we redouble our business and trade focus on Germany.
This year, of course, is a special year. Next week, Germany celebrates its 25th anniversary as a reunified nation. The challenges you have overcome as a nation reunified, after decades of division, are monumental. Germany today is an undisputed global economic powerhouse, accounting for some 20 per cent of the EU's GDP.
So, yes, it's comforting to know that Hong Kong and Germany enjoy close, mutually beneficial economic relations. Last year, our bilateral trade was worth some 14 billion Euros (about HK$130 billion), making Germany our largest trading partner in Europe.
German exporters make good use of Hong Kong's gateway role to reach huge markets in Mainland China and across Asia. In 2014, 10 billion Euros (HK$91.4 billion) worth of trade between Germany and the Mainland was routed through Hong Kong.
And there's much more, for all of us, down the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Launched by the Mainland in late 2013, the initiatives target more than 60 economies linking Asia, Africa, the Middle East and, yes, Europe.
The Belt-Road is designed to expand transcontinental connectivity, to promote economic, political and cultural development in vast areas of three continents. And I believe it can be the force that drives the global economy in the coming decades.
The enthusiastic response to the establishment of the Asian Infrastructure Investment Bank (AIIB) underscores my optimism. The AIIB will be the key financial institution supporting infrastructure development, much needed in countries along the Belt-Road. And it's obvious that many nations see the promise it offers.
Germany, the economic dynamo at the heart of Europe, is well positioned to take part. Located at the western end of the Silk Road Economic Belt and the Chongqing-Xinjiang-Europe International Railway, Germany is the essential connection between the Belt to the east and the rest of Western Europe to the west.
Dusseldorf has much to gain from the Belt and Road, given its central location, its convenient ocean, road and air transport, its mature highway system and easily accessible shipping on the Rhine.
In the next few minutes, I'd like to explain how Hong Kong can serve and support German business, how we can help you capitalise on the wealth of opportunities that will emerge from the Belt-Road over the next few years and through this 21st century.
The Belt-Road will trigger soaring investment in infrastructural facilities. It will deepen financial integration and expand the flow of trade and the building of people-to-people bonds on an unprecedented scale.
And Hong Kong will help make it happen, thanks to the unique advantages presented by our "one country, two systems" arrangement, under which Hong Kong maintains its own social and economic systems, while being part of China.
Take our financial system. Hong Kong has its own currency which is different from the Mainland Renminbi and is fully convertible. Capital from the Mainland and from all over the world flows freely in and out of Hong Kong on a fair and equitable basis.
Indeed, less than two weeks ago, Hong Kong was once again named "the most economically free jurisdiction in the world" by Canada's Fraser Institute, in its annual "Economic Freedom of the World" report. And earlier this year, the Washington-based Heritage Foundation named Hong Kong the freest economy in the world - for 21 years in a row.
China's major international financial centre, and one of the world's financial capitals, Hong Kong has the experience, the expertise and the connections to serve as the fundraising and financial management hub for the Belt-Road. Our financing options range from public offerings and loan syndication to private equity funds and the raising of funds through Islamic finance.
We have the seventh largest stock market in terms of market capitalisation and rank second, globally, in equity funds raised through initial public offerings.
Hong Kong is also the world's largest offshore Renminbi business centre. We can provide international investors with Renminbi services ranging from cross-border trade settlement to bond issuance. As trade and other economic activities along the Belt-Road expand, so, too, will the demand for Renminbi trade settlement. Hong Kong can respond to that demand. After all, we've been handling the lion's share of Renminbi trade settlement since its beginnings in 2009.
Our Renminbi debt market has grown rapidly in recent years as well. It provides a reliable channel for companies looking to issue Renminbi bonds to meet project funding needs. Last year, the issuance of Renminbi bonds in Hong Kong amounted to some RMB200 billion - a year-on-year increase of some 70 per cent.
We expect the growth potential of Shariah-compliant financial services to be equally promising, given the large Muslim population living along the Belt-Road. Hong Kong is well positioned to take advantage of those opportunities.
In fact, the Hong Kong Government successfully issued two sukuk over the past year, demonstrating the viability of our sukuk issuance and the confidence international investors have in Hong Kong, in our economic fundamentals and in our financial expertise.
The long list of infrastructure projects anticipated under the Belt-Road initiative will also boost demand for asset and risk management services.
Hong Kong's wealth and asset management business has soared in recent years. And I'm confident we're well positioned to serve as a global centre for asset management, risk management and corporate treasury activities.
Hong Kong boasts a wide variety of insurance services and derivative products as well. They offer sound reason for German companies to manage their risks by setting up captive insurers in Hong Kong.
Hong Kong's deep pool of world-class services professionals, in finance, accounting, law, architecture, engineering management and more, is another strength. Beyond financial capital and expertise, they have the international experience to lead consultancies, construction projects, and the operations and management of Belt-Road infrastructure projects.
Moreover, our legal professionals work with a world of business every day. They conduct due diligence, ensure contract enforcement and help resolve disputes. And they do so under a system supported by the twin foundations of the rule of law and an independent judiciary. Hong Kong is the ideal centre for resolving potential commercial disputes arising from business collaboration.
Ladies and gentlemen, Hong Kong was built on trade, and we remain one of the world's great trading economies. Our geographical location, at the southern gateway to Mainland China, gives us unparalleled trade opportunities. Our free-market focus, simple and low tax rate and free flow of information and capital are everything business needs to thrive in Hong Kong, in the Mainland and throughout Asia.
In short, Hong Kong is well equipped to be your strategic partner as you venture into the vast markets of the Belt-Road. In fact, Hong Kong is already home to more than 600 German companies, more than half of which base their regional operations in Hong Kong.
I invite you to join them, to join the world in Hong Kong, your fast lane to the future.
My thanks to the Hong Kong Economic and Trade Office in Berlin and to WirtschaftsWoche for bringing us together this morning.
And thank you all for taking part in today's business seminar. Thank you.
Ends/Friday, September 25, 2015
Issued at HKT 18:23
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