Budget Speech by the Financial Secretary (1) (with photos/video)
Mr President, Honourable Members and fellow citizens,
I move that the Appropriation Bill 2018 be read a second time.
2. At the start of the Chinese New Year, I deliver the first Budget of the current-term Government with a thankful heart.
3. Over the past few weeks, the public has engaged in extensive discussions and expressed diverse opinions on the Budget. I am indebted to you all, and appreciate fully that various sectors of the community have different needs and aspirations.
4. The preparation of this year's Budget has enlightened me in many ways. Budget consultation has revealed once again the wide-ranging, diverse and even conflicting demands within the community. At the same time, it has brought me closer to the public, enabling me to see things from the perspective of the people whom I serve, so that I could consider how best to use the resources pooled from them to meet their needs and those of Hong Kong. Therefore, in preparing the speech, I have placed much emphasis on explaining, in a more systematic way, the Government’s priorities in using public resources, as well as our visions for the future, development direction and financial planning.
5. The initiatives put forward in this Budget are underpinned by three main objectives: (1) Diversified economy: we have to diversify our economy to create wealth for Hong Kong and provide wider and better development opportunities for our young people. (2) Investing for the future: the outbreak of winter influenza has reminded us once again of the pressing need to improve healthcare services; an ageing population poses challenges which need to be overcome by deploying resources and making early preparation; and we also need to improve our living environment to make Hong Kong an ideal smart city to work and live in. (3) Caring and sharing: children and young people should be given more care, protection and opportunities; middle-class families need relief from financial burdens, while the grassroots and underprivileged require more support. Besides, a fulfilling life calls for not only materialistic improvements, but also better quality of life and spiritual enrichment.
6. In reality, no abundance of resources would ever enable the Government to satisfy the needs of all. It is my responsibility to take care of various sectors of the community. While addressing the pressing needs, I must also be proactive, innovative and bold in investing for the future of Hong Kong. I will elaborate on this in the ensuing parts of my speech.
7. The Gross Domestic Product (GDP) per capita of Hong Kong amounts to US$46,000, and is among the highest in the world. However, our average annual economic growth rate over the past decade was merely 2.7 per cent, reflecting a slower growth momentum. We must leverage our strength and take a forward-looking approach in positioning our future development and seeking new impetus. This will enable our economy to grow in a diversified manner, provide our young people with more room for development and improve people’s quality of life.
8. In view of the global economic landscape, we need to keep abreast of three major trends and ride on them.
9. First, the unstoppable wave of innovation and technology (I&T) has swept through the world, fundamentally changing the global economic structure and the way we live and consume. The application and omnipresence of communication technology, artificial intelligence and big data have not only spurred the birth of many new industries that operate across industries, sectors and geographical areas, as well as the emergence of the sharing economy, but also revolutionised the traditional and capital intensive business model based on tangible assets. They have generated keen competition along with opportunities for transformation. New technologies facilitate business start-up and foster new ideas, innovative products and services that generate economic benefits. This explains why major economies over the world all strive to develop I&T and regard it as the new driver of economic growth. To stay ahead of the game, we must enhance our I&T environment, attract companies from new economy sectors and research institutions to set up their presence in Hong Kong and nurture talent for a knowledge-based economy.
10. Second, the shift in global economic gravity from West to East is now established. Over the past five years, China has contributed over 30 per cent to the global economic growth and, together with other developing regions in Asia, has made up a share of almost 60 per cent. In the foreseeable future, the developing regions in Asia will continue to drive the global economy. Since the reform and opening up of our country four decades ago, China's economy grew by about 9.5 per cent per annum in real terms on average, and has risen to a US$12 trillion economy last year. Its per capita GDP also increased from just about US$200 in 1978 to over US$8,000 today. The future directions and strategies of our country’s economic development have a major global bearing. They are also the linchpin of Hong Kong's sustained prosperity.
11. Third, since the outbreak of the global financial crisis in 2008, there have been incessant protests against free trade and calls for de-globalisation in some advanced economies. Protectionism is also on the rise. The multilateral trade system advocated by the World Trade Organization over the past few decades has encountered enormous challenges. More economies have turned to regional or bilateral trade negotiations for promoting and maintaining their trading activities. While safeguarding multilateral trade, Hong Kong must also strive to conclude more regional and bilateral trade agreements.
12. In response to the three major trends just mentioned, Hong Kong needs to consolidate and build on its existing strengths, rise with the tide and seize the opportunities before us.
13. In the Dedicated Chapter on Hong Kong and Macao in the 13th Five-Year Plan, our country indicates support for Hong Kong to leverage its unique advantages, reinforce and enhance its status as an international financial, transportation and trade centre, and strengthen Hong Kong’s status as a global hub for off-shore Renminbi (RMB) business and our role as an international asset management centre, and move various services up the value chain. It also expresses support for Hong Kong in developing the I&T industry and establishing itself as a centre for international legal and dispute resolution services in the Asia-Pacific region.
14. As stated in the report to the 19th CPC National Congress, the national economy has been transforming from a phase of rapid growth to high-quality development, and China will continue to forge ahead with consumption upgrading and the supply-side structural reform. The report also proposed to pursue the Belt and Road Initiative as a priority and give equal emphasis to "bringing in" and "going global", with a view to boosting two-way investment and trade flows between China and other countries, thus making new ground for opening up on all fronts. Moreover, the report advocated the implementation of a co-ordinated regional development strategy, including the development of the Guangdong-Hong Kong-Macao Bay Area (Bay Area). On the other hand, the report pointed out the importance of forestalling and resolving major risks, especially the financial risks.
15. The direction and strategies of China’s economic development have created enormous opportunities for Hong Kong. Take the financial services industry as an example. With the unique advantage of "one country, two systems", Hong Kong has become the premier listing and fund-raising platform for Mainland enterprises and the global centre for off-shore RMB business. We have been contributing to our country’s financial reforms and RMB internationalisation in a risk controlled manner. We have also played an unparalleled role in connecting the Mainland and the international markets and investors, and achieved significant development in the process.
16. Looking ahead, our financial services industry will have ample room for more diversified development. We will map out a development blueprint for it.
17. Hong Kong’s trade volume is four times its gross economic volume, and free trade is the cornerstone of our economy. We have all along been fostering economic development by expanding the boundaries and scale of our market. In the face of rising trade protectionism and anti-globalisation sentiments, the Belt and Road Initiative and the Bay Area development serve to enlarge the hinterland for business development of our enterprises and expand our market coverage.
Belt and Road Initiative
18. The Belt and Road Initiative spans from east to west, covering both land and sea routes. By effectively improving the flow of people, goods and capital through facilities connectivity and policy co-ordination, the initiative will generate great demand for infrastructure, capital, as well as professional, legal and other high-end services over which Hong Kong has advantages. Supporting the Belt and Road development and assisting Mainland enterprises in going global will open up new room for the development of our enterprises as well as financial and professional services.
19. The Bay Area development is of strategic significance to Hong Kong in three key aspects, namely, "two markets", "I&T industries" and "land resources".
20. With a population of 68 million and GDP amounting to US$1,400 billion, the Bay Area is an enormous market for our financial and high-end services industries. Furthermore, as Hong Kong is the most cosmopolitan city offering the best professional services in the region, our enterprises and those in the Mainland may join forces in tapping new markets.
21. The Bay Area covers not only Shenzhen which houses many leading I&T enterprises, but also a large number of cities transforming towards an advanced manufacturing economy. As such, the Bay Area and Hong Kong can complement each other in the field of I&T industries, thereby creating an international innovation and technology hub where talent, research and development (R&D) institutes and enterprises cluster.
22. The Bay Area has abundant room for development as well as rich land resources. Upon the completion and commissioning of various transport infrastructure projects, travel within the Bay Area will be very convenient. With policy breakthroughs, it would offer more convenience to Hong Kong people who operate business, study, work and live in the Bay Area.
(To be continued.)
Ends/Wednesday, February 28, 2018
Issued at HKT 11:12
Issued at HKT 11:12
Audio / Video
FS delivers 2018-19 Budget in LegCo
Budget Speech by the Financial Secretary (2) Budget Speech by the Financial Secretary (3) Budget Speech by the Financial Secretary (4) Budget Speech by the Financial Secretary (5) Budget Speech by the Financial Secretary (6) Budget Speech by the Financial Secretary (7) Budget Speech by the Financial Secretary (8) Budget Speech by the Financial Secretary (9) Budget Speech by the Financial Secretary (10)