"Servicing China: Prospects and Challenges" --
Speech by the Financial Secretary, Mr Donald Tsang

Wednesday, October 22, 1997

Following is a speech by the Financial Secretary, Mr Donald Tsang, at the Opening Ceremony of the Conference on China's Service Industries organised by the Hong Kong Coalition of Service Industries today (Wednesday):

Mr Stevenson, Director Lan, ladies and gentlemen,

It gives me great pleasure to speak at the opening ceremony of this Conference.

First of all, on behalf of the Government of the Hong Kong Special Administrative Region, I would like to extend a very warm welcome to the delegation from the Office of Tertiary Industries of the State Planning Commission in its first ever study mission to Hong Kong. With the reunification of Hong Kong with China on 1 July, the economic co-operation between Hong Kong and the Mainland opens a new chapter. This visit of the State Planning Commission is a most timely event. I must thank the Coalition of Service Industries for taking the initiative to organise the visit. This is a fine example of the kind of public-private partnership which makes Hong Kong tick.

The economic relationship between Hong Kong and the Mainland stretches back into the mists of time. But in its modern guise it really began about two decades ago when China initiated its economic reforms and Hong Kong business leaders responded by setting up industrial ventures in the Mainland. This has paid off for both sides. The investments by Hong Kong businessmen spurred economic growth on the Mainland. With the support from the large hinterland, Hong Kong manufacturers have thrived. The economic integration has eventually restructured Hong Kong into a service-oriented economy. The services sector now accounts for about 84% of our GDP - among the highest of major economies in the world - and is responsible for the employment of 2.37 million people - nearly 80% of our working population.

The service industries of Hong Kong now not only support our manufacturing bases in the Mainland and other places near and far, but also provide excellent services to the region in the financial, trade, transport and other sectors. Our vision for the 21st Century is that Hong Kong will continue its development as a world class, high value-added service economy and the premier services centre in the region. And in our pursuit of that vision a lot will hinge on further collaboration with the Mainland.

The market reforms in Mainland China since the late seventies have brought a sea change to its economy and the living standards of its people. Per capita incomes have more than quadrupled. And I quote from the recent World Bank report entitled "China 2020" : "In two generations it has achieved what took other countries centuries." According to this report, as the Mainland maintains its momentum of reforms and skilled macroeconomics management, the GDP growth would average an impressive 6.6% over the twenty-five years until 2020.

An important component of the Mainland's future economic growth is the concerted development of the tertiary industries on the one hand and the primary and secondary industries on the other. Tertiary industries, or service industries as we commonly call them, now account for about 30% of the Mainland's GDP. There is huge room for growth as the Mainland acquires the characteristics of middle-income market economies. Obviously, capital, human resources, knowledge, expertise, information and other factors from the outside will provide tremendous driving forces. Hong Kong has a key role to play here, just as we have helped the profound industrialisation of the Mainland.

We indeed have a lot to offer as a highly-developed service-oriented economy -

(i) Hong Kong has a high-quality, competent workforce apt to work in the services sector. Professionals abound.

(ii) Hong Kong is a cosmopolitan city where East meets West and information is freely accessible. We are China's window to the world.

(iii) Hong Kong is a leading financial centre in the world. We are not only the main conduit of foreign capital for the Mainland, but we ourselves are the Mainland's largest external investor.

(iv) Hong Kong has a very high concentration of enterprises, be they foreign or local, with considerable expertise and experience in finance, trade and other service sectors.

(v) Most important, Hong Kong and the Mainland have very close cultural, language and geographical and constitutional ties that could not be severed.

Given Mainland's bright economic prospect and Hong Kong's competitive edge, I am confident that our business leaders like all of you here will grasp the opportunities to tap the vast potential of the Mainland and contribute to its development. On the part of the Government, we are firmly committed to the "minimum intervention, maximum support" policy and will render the best possible assistance to you. This is the backbone of our Services Promotion Programme. To this end, our officials will work more closely with our Mainland counterparts to enhance mutual understanding and exchange information. Earlier this year we set up a dedicated, permanent Business and Services Promotion Unit reporting to me direct. Its main function is to co-ordinate and support various parts of the Government in taking forward the Services Promotion Programme. The Unit will surely have more contacts with the Office of Tertiary Industries in the days to come.

I note that the Conference today will provide an excellent forum for discussion of development potential of Mainland's service industries and further co-operation between Hong Kong and the Mainland. I wish you all a very fruitful meeting. No doubt, under the "One Country, Two Systems" principle now in practice, the economic co-operation between Hong Kong and the Mainland will intensify and flourish. Into the next century, I firmly believe that Hong Kong's service industries will grow from strength to strength and contribute greatly to a prospering economy, including tertiary industries, in the Mainland. The rewards will benefit not only the Mainland and Hong Kong, but also the region and the world at large.

Thank you.