HK best connector to China

Hong Kong has unparalleled connectivity with the Mainland of China at the business-to-business (B2B), the people-to-people (P2P) and the government-to-government (G2G) levels. We have the physical connectivity in terms of our prime location and well-developed transport infrastructure. We have the knowledge connectivity because we have the very effective networks and long experience. We also have close links with the Central Government and local authorities. Hong Kong plays a prominent role in the nation's development blueprint, the National 12th Five-Year Plan. We are already working with the various authorities on the Central Government level on the next Five-Year Plan. All this is our China advantage, but it is only half of the story.

 

Under the 'One country, two systems' principle, Hong Kong also enjoys a global advantage. Renowned international think tanks give Hong Kong high ratings globally. Hong Kong has been ranked as the world's freest economy for the past 20 years by the US-based Heritage Foundation. Hong Kong is the third most competitive economy according to the International Institute for Management Development's World Competitiveness Yearbook 2013. We are also rated as one of the leading international financial centres alongside New York and London in the City of London's Global Financial Centres Index.

 

The trick for us is to combine Hong Kong's China advantage and global advantage and turn it into your advantage, namely Europe's advantage. In Hong Kong, all companies from around the world compete on a level playing field. And, by the way, we do not have any government-owned corporations to compete with you except our train company. We do have a small stake in the Hong Kong exchange. We also have a stake in  Disneyland, but that is about all we own in the business world. So it is a level playing field and you do not compete with the government-owned companies. All companies enjoy the same low and simple tax regime; all companies are equal in the eyes of our common law system and independent judiciary; all companies benefit from our free flows of capital, information and talent.

 

CEPA benefits

Local firms together with foreign companies that are incorporated in Hong Kong can enjoy the same benefits under the cross-boundary free trade pact called the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA. These benefits include tariff-free entry for products that are classified as "Made in Hong Kong" under fairly straightforward rules of origin criteria. CEPA was launched in 2003. Since then, zero import tariffs have provided tariff savings of about RMB3.6 billion, the Mainland Chinese currency, or more than 400 million euros, to Hong Kong-based exporters.

 

I do emphasise the word "based", and these are benefits enjoyed not by indigenous Hong Kong companies, but by Hong Kong-based exporters including Hong Kong-based European exporters sending goods to the Mainland of China under CEPA. Service providers also enjoy preferential access to Mainland China markets in a wide range of services areas. My Government is working with the Central Government in Beijing to improve the implementation of CEPA and I encourage enterprises in Europe to take full advantage of this free-trade agreement. Our markets are open. Our borders are open. And more importantly, our minds are open. And that make us a very open community for businesses in Europe.

 

In the 10 years since offshore renminbi banking services were first offered in Hong Kong, our city has worked closely with the Ministry of Finance in Beijing to take forward the country's currency liberalisation programme. In doing so, we have accumulated the largest pool of renminbi liquidity outside the Mainland of China, amounting to more than RMB1 trillion in deposits and certificates of deposit; more than 380 renminbi-denominated bonds have been issued in Hong Kong with a cumulative outstanding amount of about RMB350 billion. Banks in Hong Kong handle about 70% of the total global offshore renminbi deposits and payment transactions. The internationalisation of the renminbi is a dominant trend in global finance and Hong Kong is the most effective partner to give European firms a competitive edge.

 

Now, with the economic recovery of Europe gaining traction, we are redoubling efforts to offer you Hong Kong's China advantage and global advantage so that you could convert them into Europe's advantage for doing business in China and across Asia.

 

Chief Executive CY Leung delivered this speech at the European Business Summit breakfast meeting in Brussels.