Speech by CS at Hong Kong Trade Development Council Annual Dinner (English only) (with photo)
Vincent (Chairman, HKTDC, Mr Vincent Lo), Lord Wilson (Former Governor of Hong Kong, Lord David Wilson), Lord Mayor of Westminster (Lord Steve Summers), distinguished guests, ladies and gentlemen,
Good evening. It gives me great pleasure to join you all tonight at this Annual Dinner of the Hong Kong Trade Development Council. As some of our regular guests may know, it has been a long held tradition for the Chief Executive, the Chief Secretary for Administration and the Financial Secretary of the HKSAR Government to take turns in attending this memorable occasion, meeting up with old friends and making new friends who are part of that strong Hong Kong-UK ties.
I am delighted to be back in London, attending this dinner for a second time in my capacity as the Chief Secretary for Administration, after nearly four years. Of course, in between, I had been back to the United Kingdom (UK) several times in my private capacity visiting my two sons studying at the University of Cambridge. I am sad to say that these family ties have come to an end this summer, at least for the time being, when my younger son also graduated from Cambridge and has moved on to the other Cambridge in Massachusetts, to pursue his further studies.
The UK is a country with strong historical and trade links with Hong Kong. And London is the city I called home when I was Director-General of the Hong Kong Economic and Trade Office here a decade ago. Although the Office has moved from Grafton Street to Bedford Square, London is always on the itineraries of senior Hong Kong officials given the close ties on a government-to-government, business-to-business and people-to-people level. This time, I am here not only to pay tribute to those ties, but also to explore new, multi-faceted opportunities with an old friend and partner that we cherish a lot.
With events that took place in Hong Kong and the UK since my last visit, this is the time to enhance bilateral ties leveraging on our unique relationship and the many values we share. In October last year, President Xi Jinping made a state visit to the UK, ushering in what was described as a "golden era" in China-UK relationship. In the June 2016 referendum, 52 per cent of UK people voted to leave the European Union. This vote for Brexit sets the beginning of a new era for the UK. In the past few months, Lord Mark Price, Minister of State for Trade Policy; Mr Richard Graham, Chairman of the All Party Parliamentary China Group; and Lord Mayor of the City of London, Lord Mountevans visited Hong Kong and China to discuss ways to harness closer relationship between the UK and China as well as stronger ties between the UK and Hong Kong. And during this short visit to attend the TDC annual dinner, I have called on senior UK officials, including the Chancellor of the Exchequer, Mr Philip Hammond, to explore opportunities for enhanced co-operation in areas from Fintech and FTA to sports and culture.
These visits and meetings are naturally most welcomed by us in Hong Kong. We are keen to expand our commercial and trading networks and create more favourable trading conditions for all parties, especially those from the West interested in the China markets. Hong Kong's strengths, from our unique position as the gateway to China to our rule of law, judicial independence, clean and efficient government, business friendly environment and public safety, are well known to UK companies. So is the principle of "One Country, Two Systems" enshrined in Hong Kong's Basic Law, which gives us the advantage of blooming as Asia's world city while achieving even stronger economic integration with our motherland.
Our latest active expansion of trading networks - a Free Trade Agreement with the Association of Southeast Asian Nations (ASEAN), which we hope to conclude negotiations by the end of this year, will also bring about more opportunities for the more than 600 UK companies with offices in Hong Kong, many of which are using Hong Kong as their regional headquarters or regional offices. We will continue to explore new FTAs with our trading partners including the UK after Brexit to build stronger trade and investment network for Hong Kong.
In fact, we have signed eight legally binding and 10 non-legally binding agreements with the UK, covering various fronts of collaboration such as air services, mutual legal assistance, avoidance of double taxation, investment promotion and protection and postal services. The progress is good, but we can make it from good to great.
Last year, the total trade between Hong Kong and the UK exceeded US$13 billion, making the UK our 12th largest trading partner in the world, and the second largest among the 28 Member States of the European Union. Reciprocally, Hong Kong ranked 10th among the UK's trading partners outside the EU in 2015. As the gateway to China, there were US$7.3 billion worth of goods or over eight per cent of the total trade between the UK and China routed through Hong Kong. Despite these impressive figures, we believe that there is still room for new and enhanced trade co-operation between the UK and Hong Kong.
To enhance two-way investment flows, we have put in place an Investment Promotion and Protection Agreement (IPPA) with the UK. As at end-2014, the UK ranked ninth among the 30 selected major sources of inward direct investment (IDI) into Hong Kong, with an IDI stock of US$17 billion. For the same period, the UK ranked fifth among the 30 selected major destinations of outward direct investment (ODI) from Hong Kong, with an ODI stock of over US$31 billion.
As two of the world's leading financial centres, Hong Kong and London have much to share and collaborate, and we do so through the annual Hong Kong-London Renminbi (RMB) Forum since September 2011. It is a high-level platform gathering senior representatives from both the Hong Kong and London financial sectors to foster collaboration between the two cities on the RMB business development. Facilitated by the Hong Kong Monetary Authority and the HM Treasury, the Forum convened its fifth meeting in Hong Kong in December last year. We look forward to the sixth London-Hong Kong RMB Forum to be held in London in the coming December.
Hong Kong is the world's largest offshore RMB centre, processing over 70 per cent of RMB offshore payments. "Dim sum" bonds worth over RMB670 billion have been issued and trade settlement totalling RMB6.8 trillion has been processed through banks so far. That role will only grow, given our ever-deepening economic integration with Mainland China. As you may know, the RMB will be included in the International Monetary Fund's special drawing rights basket of currencies in less than a week's time, further expanding its global acceptance and use. The UK is the second largest offshore clearing centre for RMB, processing over 6 per cent of RMB offshore payments as at July 2016. There is much potential for the financial sectors in our two cities to collaborate in the internationalisation of RMB.
Hong Kong's pillar economic sectors also cover logistics, tourism and professional services. In each of these areas, we are consolidating Hong Kong's position and seeking value-added services. Let me give you some examples of the initiatives launched by the Government in strengthening our competitive edge.
Our efficient transportation network provides excellent connectivity between Hong Kong and the rest of the world by sea, land and air, a key to our flourishing high value-added logistic services. Earlier this year, we established a Maritime and Port Board to map out Hong Kong's maritime strategy for the 21st century. On rail transport, the Mass Transit Railway Company Limited (MTRCL) is setting up a MTR Academy to promote our highly efficient rail services. In this respect, London will be no stranger as MTRCL's hundred-per cent owned subsidiary was awarded the concession to operate the Crossrail train service across London. The Crossrail is a 118-kilometre rail line with 40 stations and a carrying capacity of 200 million passengers per year that is scheduled to commence full operation in 2019.
Our aviation industry is also flying high. We see opportunities in developing Hong Kong into a centre for aerospace financing, given the continuing economic shift from West to East. The Hong Kong International Airport has been the busiest cargo airport in the world for the past six years. It is also the world's eighth busiest passenger airport. Half the world's population is no more than five hours' flying time from Hong Kong, while all of Asia's major markets are less than four hours' flight away. To ensure that Hong Kong remains a regional aviation hub, we are moving ahead with a three-runway system for the Hong Kong International Airport. Construction of the third runway is underway, with completion scheduled for 2024. We are also planning a civil aviation academy to ensure that our human resources are as remarkable as our infrastructure.
On tourism, we will continue to upgrade our infrastructure to maintain our appeal. Hong Kong Disneyland will debut its Iron Man theme area later this year, with a new hotel featuring an exploration theme due for completion next year. Our other world-class theme park, the Ocean Park, will open its first hotel in the coming year, followed by a giant water park in 2018.
When I last spoke here, in 2012, I mentioned that our old Kai Tak airport site would become home to a "state-of-the-art" cruise terminal, designed by Lord Norman Foster. Well, that cruise terminal is now in business - or in big business, as it can accommodate the world's largest cruise vessels, giving Hong Kong a heady stake in Asia's growing cruise market. The cruise terminal, I should add, is part of the largest urban development project in Hong Kong. Kowloon East, as it is called, will eventually come together as Hong Kong's new core business district of 490 hectares of land to provide 5 million square metres of commercial and office space and a wealth of tourism and leisure offerings.
Hong Kong is a predominantly service economy. Our professional services are meeting not only the business needs locally but also in the Mainland and overseas. We see particular strength in our construction professionals taking part in infrastructure projects along the Belt and Road and our legal professionals offering alternative dispute resolution services to overseas and Mainland companies. The Government has just set up a US$26 million fund to help promote our professional services to Mainland and overseas.
With keen competition from all over the world, we recognise the need to diversify Hong Kong's economy. Two particular sectors have promising prospects and are given special attention. They are innovation and technology and creative industries. I am pleased to say that Hong Kong is emerging as an innovation and technology centre, backed by world-class IT facilities, research and development institutes and personnel, financing platforms and, above all, a well-developed system to safeguard intellectual property rights.
Last year, we set up a new Innovation and Technology Bureau to drive our ambitious technology agenda. Following the start, an array of innovation and technology policies and programmes have been launched, including a US$560 million expansion of Hong Kong Science Park, which is home to some 600 technology start-ups and companies working mostly on robotics, smart cities, the Internet of Things and healthy ageing. We are also establishing a US$260 million Innovation and Technology Venture Fund, partnering with private venture-capital funds to help finance promising local technology start-ups. In parallel, we are putting more resources into our world-class universities and R&D institutions, to help them boost their midstream applied research in key areas of technology, including a US$260 million Midstream Research Programme to provide funding support for our universities to do more midstream and applied research projects.
Alongside our local innovators, about 50 of the top 100 FinTech companies in the world operate out of Hong Kong, which include Accenture's FinTech Innovation Lab. Besides the Asia Pacific branch in Hong Kong, the two other FinTech labs are in New York and London.
A few months ago, the Massachusetts Institute of Technology opened its MIT Innovation Node in Hong Kong. The centre was set up to connect MIT's celebrated technology researchers, academics and students with opportunities available only in Hong Kong and, through Hong Kong, in the neighbouring Pearl River Delta in Mainland China. In just a few weeks' time, Sweden's Karolinska Institute, one of the world's leading medical universities, will open its first overseas research centre at Hong Kong Science Park: the Ming Wai Lau Center for Reparative Medicine. It will target areas such as genome editing, biomedical engineering and 3D tissue imaging.
While looking forward to breakthroughs in the science fields, we are also building Hong Kong's reputation as an international cultural metropolis. Accounting already for 5 per cent of Hong Kong's GDP, at an average growth rate of 8.6 per cent annually since 2005, creative industries have much to offer, from film and animation to art and design.
To begin with, let me update you on the latest position of our major undertaking in cultural hardware, the West Kowloon Cultural District. In July this year, we opened the first permanent facility, the M+ Pavilion, setting a milestone in this long-term strategic investment. The opening of a host of other venues will follow, such as the Xiqu Centre for Chinese opera performances in 2018, the Art Park including the Freespace with a black box theatre and an outdoor stage from 2018 in stages, the M+ Building in 2019 and the Lyric Theatre Complex in 2021. These world-class facilities will serve as an anchorage for us to meet the growing cultural needs of the public, attract tourists and nurture artistic talent. Also, the economic value of arts and culture should not be overlooked. Earlier this year, the fourth edition of Art Basel Hong Kong showcased more than 239 galleries from nearly 35 countries and regions, including 36 UK galleries. The prestigious art mart drew nearly 70 000 buyers and visitors from around the world.
We welcome more UK exhibitors, galleries, performers and artists to our city, to enrich our cultural scene and explore room for further collaboration. At this juncture, may I show you a video on our city featuring Sir Antony Gormley's "Event Horizon Hong Kong" between November last year and May this year.
This short video has captured not only those fascinating scenes of Sir Antony's life-sized sculptures standing on rooftops of Hong Kong's skyscrapers, but also three key messages which in my view are so very relevant to our city's continuous development. First, Hong Kong is not just a place for making money but is a city with a soul. Her uniqueness as a city in China enjoying a high degree of autonomy with an international outlook has enabled her to seize opportunities for progressive development. Secondly, despite some political difficulties, Hong Kong maintains her "can-do" spirit and our government departments will rise to the challenge under clear and determined leadership. Thirdly, spectacular projects like "Event Horizon Hong Kong" will not happen unless people want it to happen. The people of Hong Kong aspire for continuous economic prosperity and stability. I have every confidence that Hong Kong's success story will continue to repeat itself.
Since we are still in the Olympic mood, let me end by congratulating the British athletes for their fantastic performance in the Rio Games. We are also seeing major infrastructure development for sports in Hong Kong. The Hong Kong Velodrome equipped with a 250-metre cycling track and spectator facilities for 3 000 people opened three years ago and has since hosted several international events such as the UCI Track Cycling World Cup in January this year during which I had a chat with Mark Cavendish, the British elite cyclist. We are now pressing ahead with another major sports development - the Kai Tak Sports Park which will spread across about 28 hectares of land with key sports facilities including a 50 000-seat main stadium, a 5 000-seat public sports ground, a 7 000-seat indoor sports arena and a landscaped park of more than seven hectares for the public to relax or enjoy outdoor exercise.
Ladies and gentlemen, Hong Kong is as rich in promise and opportunity now as it has ever been. That is not to say that we are all humming the same tune. Like people in this country, the people of Hong Kong have always taken pride in speaking their mind, in voicing their disagreements and in defending their rights and interests. And they are most welcome to do so, as long as the discourse and disputes stay within the rule of law - the essential foundation of Hong Kong life, and uphold decency and civility - the basis of an inclusive society.
So, yes, there is still plenty to do, to work out - in developing our economy, improving people's livelihood and promoting democracy. But there is also much to celebrate. The 20th anniversary of the Hong Kong Special Administrative Region takes place next July 1. Starting next April and running right through 2017, we will be showcasing the singular strengths and enduring achievements of Hong Kong and the people of Hong Kong. We will also be hosting a spectacular series of international cultural, sport and leisure events. I am not going to spoil the suspense by spilling the beans now. But one of the highlights will be a major exhibition of the British Museum collections in Hong Kong.
So, distinguished guests, friends of Hong Kong, I invite you to visit Hong Kong in 2017 on her 20th birthday as a Special Administrative Region of the People's Republic of China.
Finally, my thanks again to the Hong Kong Trade Development Council and Chairman Vincent Lo for putting on another memorable Hong Kong Dinner in London.
Thank you very much.
Ends/Tuesday, September 27, 2016
Issued at HKT 6:50
Issued at HKT 6:50