Speech by FS at Hong Kong Dinner, London 2019 organised by HKTDC in London (English only) (with photo)
Mr Glen, Peter, Distinguished Guests, Ladies and Gentlemen, Friends of Hong Kong,
I'm delighted to be here, tonight, for the 36th annual Hong Kong Dinner in London – the first time I’ve had the honour of speaking at this storied event – on this, my first formal visit to London.
And what an extraordinary time it is to be here. The word, "extraordinary," has an extraordinary number of synonyms – from "remarkable" and "special," to "unusual," "odd," and many more.
In any case, "extraordinary" seems to safely straddle both ends of the Brexit continuum – the "much better" and the "much worse" than usual.
Of course, if you've been to Hong Kong over the last few months, you might apply the same discreet adjective. Other sentiments come readily to mind.
Yes, these are truly extraordinary times for the United Kingdom and Hong Kong.
However, Brexit plays out, I'm here, as you are, to celebrate the enduring friendship of Hong Kong and the United Kingdom, a bond rooted in history and today flourishing, as never before, in business, in financial services, in arts and culture, in education and so much more.
The numbers underscore our deep ties. Merchandise trade between us last year reached £11.2 billion, up 14.6% over 2017 totals. Through the first 6 months of 2019, bilateral trade continued to grow by a resounding 18.3%, year-on-year.
Not surprisingly, well over 700 UK companies keep offices in Hong Kong, nearly half of them are regional offices or regional headquarters.
They're among the more than 9 000 international and Mainland companies that call Hong Kong home. And that's up some 10% over just two years ago.
Those companies, let me add, employ nearly half a million people in Hong Kong.
Now, despite the recent social incidents, Hong Kong remains an efficient, resilient and competitive economy.
The Hong Kong SAR Government, from the Chief Executive to the Principal Officials – myself included – and a great many others, are passionately committed to finding a peaceful and rational way forward.
We are very much engaged in dialogue with the Hong Kong community. That dialogue takes many forms, from face-to-face conversation to communication via social media channels and more. The objective is to find a mutually agreeable way to resolve the impasse.
Alongside the dialogue, there is policy. I would not pretend it's a magic bullet, but it can help with the situation. Which is why, in her policy address two weeks ago, the Chief Executive focused on housing and land supply, the most significant challenge facing our Government in creating a more inclusive society.
Those, and other high-priority initiatives, are essential to long-term harmony. But they will work only if the defining advantages that have long propelled Hong Kong's resounding success continue.
I'm speaking of our unique "One country, Two systems" framework, together with the rule of law and our formidable institutional strengths. They include our independent judiciary, a free and open society, the unfettered flow of capital, people and information, strong pool of talent, the simple and low tax regime and our unique position in China’s economic development strategies.
Candid communication, considered policy and staunch adherence to our defining advantages will make a difference and will help mend our social divide.
Earlier this month, the International Monetary Fund (IMF) forecast global growth of 3% for 2019, which would be the lowest level since the 2008 global financial crisis. In arriving at its unsettling forecast, the IMF assailed "rising trade and geopolitical tensions" for the "increased uncertainty about the future of the global trading system and international cooperation."
As for next year, "the outlook remains precarious," according to the IMF.
Not a comforting word, "precarious." Certainly not for a small and externally focused trading and services economy like Hong Kong.
Not surprisingly, our economy has been struggling. Growth in the first half of this year was a marginal 0.5%. Given the external headwind and domestic social unrest, we expect the negative quarter-on-quarter growth would continue and we need to brace ourselves for the very likely eventuality of a negative growth for the full 2019.
The economy of Hong Kong is powered by our small and medium-sized enterprises (SMEs). And I can tell you, they are suffering.
Which is why, in August, September and, again, just last week, I announced in turn three packages of support measures designed to help our SMEs, and the people of Hong Kong, through this distressing time.
Despite all the challenges, I'm here to tell you that Hong Kong's fundamentals are working just fine. Our institutional strengths and unparalleled competitiveness remain intact.
One telling hint of that is our financial stability. As a matter of fact, if you look at our stock market, our banking system, our fund flow, the HKD to USD peg, there's little to suggest that we have been going through a testing time since early June, both as a society and as an economy.
Just last month, the Global Financial Centres Index, published by London think tank the Z/Yen Group, gave Hong Kong an unequivocal vote of confidence. The Index once again ranked Hong Kong third, trailing New York and barely behind London.
I was in Washington DC less than two weeks ago for the annual meetings of the IMF and the World Bank Group. There, I met with Moody's and Standard & Poor's. Both of them recognised Hong Kong's fiscal strengths in their latest reports. S&P affirmed our AA+ long-term credit rating and our "stable" outlook rating.
There's more good news. The World Economic Forum's Global Competitiveness Report released earlier this month ranked Hong Kong third, markedly up from last year's 7th-place finish.
Hong Kong was also named the world's second-most competitive economy in this year's World Competitiveness Yearbook published by the Swiss-based International Institute for Management Development.
Underlying those, and the many other global plaudits Hong Kong receives, year after year, is our unshakeable economic freedom.
The Washington-based Heritage Foundation knows that; so, too, does the Fraser Institute of Canada. This year, both once again named Hong Kong the world's freest economy – the Heritage Foundation for the 25th year in a row.
In short, ladies and gentlemen, Hong Kong remains wide open for business. Your business, Mainland China's business, the world’s business. Beginning with our financial services sector.
Our advantage here is clear and endlessly compelling. Hong Kong is as national as it is international. More than one of the world’s major financial centres, we are China’s international financial centre. And that is not going to change.
With nearly 200 banks, including the world’s largest bank and 77 of the top 100, Hong Kong is China's window to a world of capital.
Not surprisingly, the Mainland looks to Hong Kong, our capital formation and professional services prowess, to help power the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development.
Hong Kong has the experience, the expertise and the connections to match global investors and fundraisers with project owners from China and around the world. In this, our options are wide-ranging.
But in the interest of time, I would like to highlight just green finance. We have adopted a four-pronged approach to develop Hong Kong into the green finance hub of Asia. They are (1) standard setting and certification, (2) regulatory framework, (3) market infrastructure, and (4) international collaboration.
As a result, Hong Kong arranged and issued US$11 billion in green bonds last year, tripling that of 2017. We have the ability to meet the green infrastructure project needs of the Mainland and the economies of the Belt and Road.
The Government also leads by example. In May, the Hong Kong SAR Government issued its inaugural green bond which had attracted orders more than four times its issuance size.
Choice of currency is also central to project financing. And the Renminbi is one of the currency choices. Good news for Hong Kong, home to the deepest pool of offshore Renminbi funds in the world. We also maintain the world's largest offshore Renminbi foreign exchange and interest-rate derivatives market, offering a wide variety of Renminbi products and services.
Hong Kong's financial services expertise will lead the way for the Greater Bay Area as well.
The cluster city development covers Hong Kong, Macau and nine of the fastest-growing cities in the Pearl River Delta region. With a collective population of some 70 million consumers, and a combined GDP totaling US$1.6 trillion, the Greater Bay Area presents unlimited potential for Hong Kong’s financial services, in particular asset and wealth management, family office, insurance, private equity and IPOs. We welcome UK companies to partner with us.
Innovation and technology are at the heart of the Greater Bay Area's ambitious plans. And in this, Hong Kong will also play a pivotal role. We focus on four areas, both in terms of effort and resources: artificial intelligence and big data analytics, biotech, financial technology, and smart city. In just over two years, we have committed over £10 billion and rolled out policies and measures to facilitate its development.
Let's take the blooming financial technology sector as an example. At last count, some 600 fintech startups and companies were doing business in Hong Kong, about 40% of them are from outside of Hong Kong.
In fact, the Hong Kong fintech sector is well represented this evening. Some 20 high fliers from Hong Kong fintech companies and start-ups are here with me to connect with one of the fintech world's most innovative and successful communities. Hong Kong-UK fintech cooperation got its formal start two years ago, with the signing of the UK-Hong Kong Fintech Bridge Agreement. That has set in motion welcome, and expanding, cooperation at industry-to-industry, regulator-to-regulator and government-to-government levels.
And let me also bring you update about our development on the fintech front - following the granting of eight virtual bank licences earlier this year, a number of them will begin operation before the end of the year. What’s more - the two companies with virtual insurance licences granted earlier have already commenced operation.
Next week, November 4-8, is Hong Kong Fintech Week. The annual event will attract some 10 000 fintech executives, investors, entrepreneurs and regulators from all over the world. I’m pleased to note that a UK delegation will once again take part. And I invite you to join them – to join us in Hong Kong.
I'm just getting warmed up, but I know I can’t compete with the imminent arrival of the key lime pie and Chantilly cream, or the companionable fine wine.
Allow me, then, to wind down by reinforcing my main takeaway: that Hong Kong, despite our social incidents, continues to do what we do best. And that’s connect – and excel – with companies and economies, east and west.
Alongside our deepening economic integration and boundless opportunities with China, we continue to connect with the world.
Earlier this year, Hong Kong signed a free trade agreement with Australia. That, ladies and gentlemen, is Hong Kong's 8th FTA – and the 4th this Government has signed since taking office just over two years ago. Another recent FTA and related investment agreement is with the 10 member nations of ASEAN, which have been fast growing in recent years offering tremendous business future.
We hope, too, to pursue an FTA with the UK, following up on the "Strategic Dialogue on Trade Partnership" our two sides launched two years ago. A UK-Hong Kong FTA would be of profound value to businesses on both sides.
That, and much more, will unfold for the economies, and communities, of the United Kingdom and Hong Kong in good time. Of that, I am confident.
My thanks to Peter Lam and everyone at the Hong Kong Trade Development Council for another memorable Hong Kong Dinner in London.
And now, Ladies and Gentlemen, on with the pie. And may the wine and the conversation flow long into this good evening. Thank you.
Ends/Thursday, October 31, 2019
Issued at HKT 9:00
Issued at HKT 9:00