Financial Secretary Paul Chan

Reflections from Davos

Ladies and gentlemen, we are living through an era of profound complexity and transformation. Having just returned from the World Economic Forum in Davos, I can attest to the deep sense of reflection shared among global leaders. While opinions may diverge on many fronts, there is a striking convergence on one point: the world is becoming increasingly unfamiliar. Longstanding allies stand at the risk of becoming adversaries. The very principles that underpin the international order for eight decades – sovereignty, territorial integrity, and the authority of the United Nations – are being openly denounced.

Some speak of the end of the rules-based international order. Others push for Europe's independence. Yet the underlying message is clear: countries are reassessing their economic and security relationships, seeking to build strategic resilience, and adapting to a more fragmented global environment.

A key theme emerging from Davos was diversification – across trade, supply chains and finance. Faced with growing uncertainty, economies are striving to forge new partnerships and gain access to alternative markets.

China's opportunities

It is against this backdrop that China's role becomes particularly relevant.

In a world marked by volatility and unilateralism, China offers a high degree of stability and predictability. At the World Economic Forum, Vice Premier He Lifeng reaffirmed China's unwavering commitment to openness and co-operation, emphasising that reform and opening-up remain fundamental pillars of national policy. He also reiterated China's support for free trade, multilateralism, and mutual respect.

These are not aspirational statements. They signal policy continuity and consistency, qualities that are vital for global investors and businesses.

Looking ahead, China's development will continue to create substantial opportunities for the world. Two areas are particularly notable.

First, China's medium-to-long-term growth trajectory remains solid and resilient. Its economy met its 5% growth target last year, averaging 5.4% during the 14th Five-Year Plan period, and accounted for around 30% of global gross domestic product (GDP) growth.

The central authorities' focus is now on stimulating domestic demand as a key driver of sustained growth. As the middle-income population expands, so too does the appetite for high-quality goods and services. It has made clear that foreign products and services are welcome. And in fact, China has been organising the China International Import Expo since 2018. This is creating considerable opportunities for international businesses.

Second, China is placing strategic emphasis on technological advancement. In the recommendations for the upcoming 15th Five-Year Plan, science and technological self-reliance are at the forefront of national development. China's growing capabilities in articial intelligence (AI), robotics and biotechnology have already captured global attention – and this momentum will only accelerate. With a strong focus on integrating technological and industrial innovation, China is determined to lead in critical technologies that will define the future global economy.

Together with a growing Southeast Asia, this part of the world is becoming a vital source of growth, innovation, as well as business and investment opportunities.

Hong Kong's value proposition

This naturally brings us to Hong Kong. What is our role in this evolving landscape? And what is our value proposition?

We believe Hong Kong's significance will only grow. Hong Kong is very much the gateway for the world to access China's and Asia's opportunities, and vice versa. We have convenient and often priority access to the Mainland market, while maintaining all the characteristics that define us as an international metropolitan city: the common law system; a judiciary exercising powers independently; free flow of capital, goods, people and information; a low and simple tax system; a currency pegged to the US dollar; and more. As a free port, Hong Kong remains steadfastly committed to free trade and supportive of a rules-based multilateral trading system.

In a world where economies are reconfiguring value chains and seeking more resilient, diversified partnerships, Hong Kong stands out as a reliable, trusted, resourceful and well-positioned partner, bridging the Mainland and the world.

In the realms of finance, allow me to highlight two key specific areas that may be of interest to you.

Two-way funding platform

First, our role as the premier two-way international fundraising platform. Our stock market had a strong performance in the past two years, and in fact topped the initial public offering (IPO) league table last year. It continues to attract significant international interest, with more than 400 companies currently in the IPO pipeline. Many of them are Mainland enterprises engaged in frontier technologies and advanced manufacturing. These companies are choosing Hong Kong to fund and support their global expansion and supply chain diversification. A notable example is CATL, which launched the world's then largest IPO in Hong Kong last year to fund its expansion into Hungary.

In other words, Hong Kong serves as a gateway for global investors to access China's innovation-driven opportunities.

At the same time, we are working to bring more global companies to the Hong Kong market. For those exploring listing venues beyond the US, Hong Kong offers a compelling choice. Our secondary market is deep, liquid and international. Statistics show that approximately 50% of capital in our stock market comes from global institutional investors, 25% from Mainland Southbound flows, and another 25% from local institutional and retail investors. That is to say, by listing in Hong Kong, companies can gain access to both international and Mainland capital.

Hong Kong is indeed emerging as a listing hub for companies from across the globe. To drive this forward, the Hong Kong Stock Exchange has since 2023 expanded its list of recognised exchanges for dual primary or secondary listings – now covering 20 markets, including those in the Middle East and the Association of Southeast Asian Nations (ASEAN). In fact, recently, issuers from Thailand, Indonesia, Kazakhstan, Singapore, and the United Arab Emirates (UAE), have chosen Hong Kong as their platform to access global capital.

We are also strengthening connectivity with other markets through mutual listing of exchange-traded funds (ETFs) that invest in each other's market, providing investors with more choices. For example, Hong Kong and Saudi Arabia each have listed two ETFs tracking each other's markets. We are also working with Korea on similar arrangements.

Offshore RMB business hub

The second area is our position as the world's leading offshore renminbi (RMB) business hub. This is particularly relevant today, as the use of RMB continues to grow globally – driven by two key forces.

First, the reconfiguration of global supply chains. As more Chinese enterprises expand overseas and deepen co-operation with international partners, the cross-border use of the RMB is naturally increasing.

Second, the growing demand for diversification. RMB assets tend to have a lower correlation with traditional global markets, making them an appealing option for investors seeking to manage risk.

Besides, China currently accounts for around 13% of global trade, but the RMB currently represents just 3 to 4% of global payments via SWIFT. The potential for further expansion is significant, especially at a time when the US dollar is being weaponised.

Hong Kong is expanding its offerings in RMB-denominated investment and risk management products, strengthening the related infrastructure, and enhancing its market liquidity. These efforts are creating more investment channels for international holders of the currency, and supporting the prudent internationlisation of the RMB.

Concluding remarks

Ladies and gentlemen, let me conclude by reflecting on Hong Kong's enduring role in a rapidly changing world.

Hong Kong has always thrived as an open, transparent and outward-looking financial and commercial hub. We believe that prosperity is built not by erecting barriers, but by building bridges – bridges that connect capital with innovation, East with West, and ideas with impact.

At a time of global fragmentation, Hong Kong will continue to remain open for business, welcome partners from around the world to join us in shaping the future of Asia – and the world at large.

Financial Secretary Paul Chan gave these remarks at the Asian Financial Forum Keynote Luncheon on January 26.