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Gov't committed to open economy

November 13, 2017

Chief Executive Carrie Lam

The World Chinese Economic Summit is a flagship event created by the Asian Strategy & Leadership Institute with a view to enhancing connectivity and business linkages between China and Southeast Asia, as well as China and Europe. It is most timely for this summit to take place in Hong Kong as just yesterday, Hong Kong signed a Free Trade Agreement (FTA) and related investment agreement with the 10 member states of the Association of Southeast Asian Nations (ASEAN). This is an important milestone in the bilateral trade and investment relations between Hong Kong, China and ASEAN, which today is our second largest merchandise trading partner and the fourth largest in services trade. The agreements are significant and comprehensive and will bring about new business opportunities and boost our trade and investment ties through legal certainty, better market access, and co-operation in capacity building and technical assistance. I notice that this year, the summit's theme is "Managing Global Uncertainty: Exploring New Opportunities". Deeper and broader economic integration as well as renewed commitment for free and open trade are, in my view, a pertinent response and approach that economies should take in managing global uncertainty and exploring new opportunities.


The global economy, as we speak, is full of uncertainties. We see an increasing trend in protectionism or nationalism - with the United States withdrawing from the Trans-Pacific Partnership, and Britons voting to exit the European Union - all these have an impact on the global picture. Nevertheless, in the midst of all these uncertainties, I am pleased to say that at the 25th APEC Economic Leaders' Meeting held in Da Nang, Vietnam, two days ago, leaders of APEC have recommitted to the common purpose, that is, to foster a shared future of a peaceful, sustainable economic growth and prosperity in the Asia-Pacific region and reaffirmed the aspirations towards balanced, inclusive, sustainable, innovative and secure growth in the APEC region.


Clearly, the world economy is in dire need of a new and strong driving force. I believe the Belt & Road Initiative, which a couple of speakers have touched upon, spanning across Asia, Europe and Africa, covering around three-quarters of the world's land mass and almost 60% of the world population, can be that much-needed force, through encouraging closer economic, infrastructural and cultural connectivity to achieve common prosperity. As President Xi Jinping said in his keynote address at the APEC CEO Summit in Da Nang last week, the Belt & Road Initiative is from China, but it belongs to the world; it is rooted in history, but oriented towards the future.


The Belt & Road Initiative is essentially about building connections, in terms of enhancing policy co-ordination, strengthening infrastructural facilities connectivity, facilitating trade and investment, deepening financial integration and building people-to-people bond. With our distinctive advantage under "one country, two systems", Hong Kong is the right place to bring together all those who would like to contribute to, and benefit from this Initiative.


HK builds connections

Indeed, Hong Kong is adept at building connections. Our economy has been consistently recognised as the freest and most competitive by the Heritage Foundation and the International Institute for Management Development. The Hong Kong community is also among the most receptive of different cultures and values, and our boundaries are open for people from all over the world to come in and out for work, study or leisure. Our long history of openness has connected us to various places in the world, and as a gateway to China.


These unique strengths and core competencies aside, the HKSAR Government must advance with the trend of times, live up to our responsibility and connect with various parties in order to seize those many opportunities coming our way. Therefore, both in my Election Manifesto and my maiden Policy Address delivered a month ago, I pledge that the Government will play the additional roles of a "facilitator" and a "promoter", display determination and boldness, and make timely investments.


As a significant action in driving the Belt & Road Initiative, we hosted the second Belt & Road Summit in September this year together with the Hong Kong Trade Development Council, under the theme "From Vision to Action". It attracted over 3,000 participants, including senior government officials and top business executives from economies along and beyond the Belt & Road to explore opportunities being brought by this Initiative. The business matching sessions of the Summit highlighted investment opportunities in transport and logistics infrastructure, energy, natural resources and public utilities, and urban development. Over 170 investment projects were featured through project presentations and networking sessions with more than 600 participants. In addition, one-to-one business matching meetings were arranged for more than 200 project owners, investors and service providers.


As transpired from the discussions at the Belt & Road Summit, as well as our engagement with various economies and stakeholders, it is clear that there are four key areas which Hong Kong can offer to the Belt & Road Initiative.


First of all, behind the investment in the Belt & Road, a variety of professional services are required to turn plans into reality. The Belt & Road Initiative generates immense need for professional services ranging from investment and risk assessment, research, insurance, accounting, legal services to arbitration services. Hong Kong's professionals are highly regarded not only for their expertise and competence, but also for their professional ethics and global connection. Therefore, Hong Kong's professionals are excellent guiding partners for anyone whose business is to venture into the Belt & Road. Indeed, these professional services sectors now represent new economic drivers for Hong Kong and are essential to the Belt & Road vision.


Secondly, as an international business and financial hub, Hong Kong is well positioned to finance the massive infrastructure projects along the Belt & Road. We top global ranking in fundraising in initial public offerings, and offer syndicated loans, private equity funds, bonds, sukuk, etc. We are also Asia's centre of asset and risk management, insurance and re-insurance, and corporate treasury services. Hong Kong is well placed to meet the rising demand for fundraising and financial management services for the Belt & Road projects.


Thirdly, we can promote co-operation among Belt & Road countries through our global connections. Hong Kong is a vibrant civil society embracing people from different cultures and backgrounds, who have strong bonds with their overseas root. It is common to find businesses, chambers of commerce, professional bodies, youth and other social groups as well as individuals having extensive and amicable networks overseas. Such networks are our invaluable social capital.


On a government-to-government level, we regularly visit different countries, including those along the Belt & Road, to reinforce links and explore new grounds for co-operation. In fact, since taking office in July this year, I have already visited five countries, and our role to contribute to the Belt & Road Initiative is always the key message that I emphasise. We will continue our efforts in connecting and deepening our external relationship. We will also make good use of our connections to cultivate more exchanges among countries along the Belt & Road, be they cultural, academic or other exchanges, so as to foster people-to-people bond.


HK a vital middleman

Last but not least, Hong Kong serves as a vital trading hub connecting Mainland China to other Belt & Road countries. We are the world's sixth-largest exporter of merchandise trade, the 15th-largest exporter of commercial services, and the seventh-largest trading entity in the world.


We believe that deeper economic integration and stronger ties among the Belt & Road countries will not only facilitate economic growth and job creation, but also promote innovation through healthy competition, which will in turn be beneficial to the development of all parties involved.


To give the business community a better grasp of the Belt & Road Initiative, we are in discussion with the Central Authorities with the aim of entering into an agreement of Hong Kong's full participation in this Initiative with the National Development & Reform Commission by the end of this year. The agreement will cover various areas such as finance, infrastructure, economic and trade facilitation, people-to-people bonds, project interfacing, dispute resolution as well as the Guangdong-Hong Kong-Macao Bay Area development.


In case there is anyone here who is not familiar with the bay area development I just mentioned, it is a strategic development plan covering Hong Kong, Macau and nine cities in Guangdong Province including Shenzhen, Zhuhai and Guangzhou. With a total population of more than 66 million and an aggregate gross domestic product of over US$1.3 trillion, the bay area compares favourably with Australia or the Republic of Korea.


With the development plan in place, the bay area will provide a blueprint for building a world-class city cluster through complementary co-operation among Guangdong, Hong Kong and Macau. We will actively participate in the bay area development, so as to create favourable conditions for diversifying our industries, in particular for promoting innovation and technology.


Open economy universally beneficial

Amidst new strategies and new actions, I reiterated at the APEC Economic Leaders' Meeting that Hong Kong is a staunch supporter of free trade, and we will continue to uphold the multilateral trading system which we believe helps create a globalised economy, whereby flow of goods, services, capital, people, knowledge and technology across borders are expedited. Hong Kong has been actively taking steps to strengthen Hong Kong's trade and economic relationships with our partners through the negotiation of the Free Trade Agreements (FTAs), Investment Promotion & Protection Agreements, as well as Comprehensive Double Taxation Agreements. The Hong Kong-ASEAN FTA is a significant milestone. My Government will spare no efforts in fostering an open economy that benefits all.


We are thankful for key players in ASEAN, including the Asian Strategy and Leadership Institute, for their support and contributions to bringing these negotiations to fruition. The emergence of ASEAN, located as a strategic and key intersection of the Belt & Road, is a future driver of the regional and global economy.


We will therefore step up our engagement with ASEAN. We will expand our network of Economic & Trade Offices there, by opening a new office in Thailand, which will be our third office in ASEAN, after Singapore and Indonesia.


In the coming few years, the Belt & Road Initiative and the bay area development will bring enormous opportunities for Hong Kong, for Mainland China and for the rest of the world. To capitalise on the opportunities, it is important that we learn and understand the political and cultural environments, business landscapes and potential areas of collaboration with different markets, especially the many emerging markets along the Belt & Road which we currently are relatively less familiar with. I am confident that events like today's summit, which engages the collective wisdom of different sectors, can help foster a deeper understanding of these economies, and will facilitate the drawing up of strategies in seizing the opportunities ahead of us.


Chief Executive Carrie Lam gave these remarks at the opening ceremony of the 9th World Chinese Economic Summit 2017 on November 13.

Belt and Road