HK financial regime robust: FS
(May 25, 2017)
Financial Secretary Paul Chan made the statement last night in response to US-based credit rating agency Moody’s downgrading of Hong Kong’s credit rating from "Aa1" to "Aa2".
Mr Chan said although the city maintains a close economic relationship with the Mainland, Moody's decision to cut Hong Kong's rating following its downgrading of China's credit rating was mechanical.
Moody's said Hong Kong’s participation in China's projects can expose the city to risks.
Mr Chan said investment decisions by Hong Kong businesses on Belt & Road projects are based on commercial considerations.
"The majority of these loans have been made to large state-owned enterprises and multinational companies, and the credit quality of these borrowers is high.
"The associated classified loan ratio has also decreased since last year.
"Furthermore, under the Hong Kong Monetary Authority's close supervision, banks in Hong Kong have maintained good underwriting standards. Banks have also strengthened their risk on Mainland-related lending."
Moody's said there has been increased intrusion from the Mainland into Hong Kong's policy formulation process.
In response, Mr Chan said the comments are speculative and groundless.
"Hong Kong has been exercising a high degree of autonomy and enjoying executive, legislative and independent judicial power, including that of final adjudication in accordance with the Basic Law.
"Both the Central People's Government and the Hong Kong Special Administrative Region Government remain firmly committed to upholding the principle of 'one country, two systems'.
"This principle is also the vital foundation for sustaining Hong Kong's economic growth."
