HK set to promote Fintech

Financial Secretary John Tsang

Innovative technology is a proven driver of economic growth. It can help diversify our economy, expand employment opportunities, enhance competitiveness of industries as well as improve our quality of life. Cutting-edge technologies, such as big data analytics, AI, cloud computing, virtual reality, augmented reality, robotics and whatnot, can kick-start new ideas, nurture start-ups and revitalise traditional industries.

 

This is the reason why Government has been putting in tremendous efforts over recent years towards achieving the goal of nurturing a knowledge-based economy, fostering an innovative and technology-friendly culture in our community, as well as creating a healthy eco-system for technological entrepreneurship and start-ups.

 

And this is the reason why I have allocated some $18 billion in my government budget this year to support development as well as application of innovative technologies.

 

These initiatives range from the promotion of smart production and funding for research in tertiary institutions, to cash rebate in order to encourage more R&D in the private sector.

 

Among other things, we are also setting up a $2 billion Innovation and Technology Venture Fund, to partner with private venture-capital funds to invest in local technology start-ups.

 

Money alone, of course, is no guarantee of major innovation. Which is why we have been busy connecting local stakeholders, while attracting international talent and prestigious institutions to Hong Kong.

 

A dozen overseas institutions, innovation labs, incubators and accelerator programmes have already found their way to Hong Kong, making good use of our R&D prowess and our unique strengths.

 

Accenture, for example, one of the leading global professional services companies in the world, has established its FinTech Innovation Lab in Hong Kong in 2014, following similar programmes of the company in New York and London, while both the Commonwealth Bank of Australia and the Wearable IoT World Labs from San Francisco launched their innovation labs in Hong Kong just earlier this year.

 

In recent months, we have welcomed two of the world’s leading institutions to Hong Kong: the renowned MIT (Massachusetts Institute of Technology) opened its first overseas Innovation Node here, while Sweden’s Karolinska Institutet, a storied medical university, established its first overseas research base at the Hong Kong Science Park.

 

Fintech is definitely one of our major priorities. We shall be creating a dedicated working space to support 150 start-ups over the next few years, and we shall be arranging some 300 university students to join Fintech training camps in overseas institutions. We are also bringing up the next generation of Fintech talent to drive development of various technologies, from cyber security to blockchain.

 

The Hong Kong Monetary Authority has recently launched a supervisory sandbox to facilitate trials and development of Fintech. I am certain that we shall be seeing more and more pioneering Fintech applications coming out in the market soon.

 

And you will have a chance to check out the latest banking and financial technology innovations out there at the first ever Hong Kong Fintech Week, starting from next Monday.

 

And now, I am proud to say, we have the HSBC-ASTRI Research and Development Innovation Laboratory to add to our fast-expanding I&T sector. This collaboration between one of the world’s biggest and most prestigious banking groups and our own Applied Science and Technology Research Institute is both timely and opportune. And I have no doubt that it will expand Hong Kong’s Fintech world, creating innovative opportunities that will reward us all.

 

Financial Secretary John Tsang gave these remarks at the HSBC-ASTRI Research and Development Innovation Laboratory launch ceremony on October 31.

 

 

 

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Creating a favourable fintech environment

Financial Secretary John Tsang

While our financial services sector employs only about 6% of Hong Kong’s working population, it contributes some 16% of our total GDP. The point here is clear and compelling: the financial services is a high value-added profession that is crucial to the sustained prosperity of Hong Kong’s economy.

      

Hong Kong is a leading international financial centre. And equally important, we are the international financial capital of China. While China’s economy is growing somewhat slower than before, it is still the major driving force of the global economy that’s contributing about one quarter to one third of the world’s economic growth.

      

Hong Kong has long been our nation’s critical intermediary, channelling foreign investment and capital to fuel the Mainland’s extraordinary growth.

      

Our financial services sector, in particular, has been playing a major role in the internationalisation of the Renminbi. We are the world’s leading offshore Renminbi business hub, with the largest offshore Renminbi liquidity pool at some 730 billion Yuan at the end of August. In the first half of this year, some 70% of the world’s Renminbi payment transactions were processed right here in Hong Kong. And where you are sitting in HSBC, they processed a pretty big part of that.

      

Following the International Monetary Fund’s decision to add the Renminbi to its SDR basket starting from the beginning of this month, banks and financial institutions in Hong Kong will benefit from the growing demand for Renminbi trade settlement and investment services.

      

Our deepening economic ties with the Mainland, in the form of the Shanghai-Hong Kong Stock Connect, the Mainland-Hong Kong mutual recognition of funds arrangement, as well as the Shenzhen-Hong Kong Stock Connect which will be launched soon, will help accelerate the opening up of China’s capital markets to the world. These initiatives will also create more opportunities for our financial services sector.

      

And there is much more. Some of our speakers must have shared with you earlier their take on the development and application of Fintech in Hong Kong, and on how Fintech is creating a whole new world of possibilities for the financial services sector. For people like yourselves.

      

This is the reason why the Government is working together with a number of renowned international institutions in creating a favourable and enabling environment for the development of Fintech in Hong Kong, through innovation labs, incubators and accelerator programmes as well as dedicated work space for Fintech start-ups.

      

The Hong Kong Monetary Authority has recently launched a supervisory sandbox to facilitate trials and development of Fintech. I am certain that we shall be seeing more and more pioneering Fintech applications coming out in the market soon.

      

And you will have a chance to check out the latest banking and financial technology innovations out there at the first ever Hong Kong Fintech Week from November 7 to November 11. So stay tuned. Make sure you attend that and get a close look for yourself what is out there.

      

Ladies and gentlemen, the future of financial services in Hong Kong is highly promising, and I can tell you that and there will be plenty of demand for people with the appropriate knowledge, with the appropriate skills to work in this very exciting sector. The opportunities are there, and it is now up to you to prepare yourselves for these big challenges.

  

Financial Secretary John Tsang gave these remarks at the Financial Services Development Council Career Day on October 29.

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HK a gourmet paradise

Financial Secretary John Tsang

Hong Kong has emerged as the region’s wine-trading hub, while Hong Kong people have cultivated a spirited taste for the grape. Last year, Hong Kong took in a record $10.8 billion worth of wine from around the world, and that is 2.8 times more than what we imported in 2008.

 

And our fascination with wine is all-consuming, from international commerce to big-bottle auctions as well as secure storage.

 

As for the dining part of this festival, Hong Kong has long been hailed as the true paradise for foodies. We’ve got just about everything, from Hong Kong-style yum cha and street food, to Michelin-starred restaurants serving international cuisines from every corner of the Earth. Anything an adventurous epicurean could dream of.

 

And the Hong Kong food scene is revving up for even more. By year’s end, the Hong Kong Government will put its Food Truck Pilot Scheme on the road, starting with a caravan of 16 at eight tourist attractions. I can’t wait to join the line.

 

This year, the good-life prospects are all but endless. With 20% more space to play with, the Festival welcomes 20% more booths – 280 for fine wine, 140 for fab food. Together, they fill five soon-to-be-packed theme zones. And most of it is there for you in the beguiling alfresco setting.

 

Alongside the wine booths from nine countries and regions, there’s a world of rare whisky and award-winning craft beer to toast to. And the Hong Kong Bar showcases magnificent mixology, while Street Eat features the best of Hong Kong street food.

 

Financial Secretary John Tsang made these remarks at the opening ceremony of the 2016 Hong Kong Wine & Dine Festival on October 27.

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Gov’t supports spectacular sports

Chief Secretary Carrie Lam

The Prudential Hong Kong Tennis Open 2016 has been awarded “M” Mark status by the Major Sports Events Committee of the Sports Commission of the HKSAR Government and receives generous funding support from the Government’s Mega Events Fund.

 

This fully demonstrates the Government’s support for spectacular sports events to take place in Hong Kong.

 

This month has been branded Sports Month by our Hong Kong Tourism Board. We have hosted the Hong Kong Cyclothon, the FIA Formula E Hong Kong ePrix and the Hong Kong ASTC Triathlon Asian Cup and the annual Cross Harbour Race just took place this morning.

 

I note that apart from taking part in this keen competition, some players are able to see more of our city on this visit and some even took part in charitable work serving food to the elderly whilst in Hong Kong.

 

I take this as their love and passion for our city and I look forward to welcoming them back. To spectators coming from abroad, please enjoy Asia’s world city.

 

Let me thank the Hong Kong Tennis Association for bringing back the Hong Kong Tennis Open to us and Prudential Hong Kong for being the title sponsor of this event.

 

Chief Secretary Carrie Lam made these remarks at the prize presentation ceremony of the Prudential Hong Kong Tennis Open 2016 on October 16.

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HK, Japan celebrate Autumn

Acting Chief Executive Carrie Lam

That Hong Kong is chosen for such a momentous celebration of Japanese culture, food, sports, entertainment and performances is indeed an honour. The Hong Kong Special Administrative Region Government welcomes this opportunity. I should add that I am attending in my capacity as the Acting Chief Executive, as the Chief Executive is right now attending a meeting in Nanchang, Jiangxi Province, which demonstrates the importance we attach to this event. Indeed, the festival will run for a full two months providing ample opportunities for Hong Kong people and visitors to experience the many things that Japan has to offer.

 

This festival is also a telling statement of the buoyant relations that exist between Hong Kong and Japan. Business, of course, has long led the way – and it continues to do so today. Last year, Japan was our third-largest trading partner in goods, while Hong Kong was Japan’s seventh-largest. And Japan was our fourth-largest partner in services trade. More than 1,300 Japanese companies now maintain offices in Hong Kong.

 

Beyond trade and commerce, the ties between our people are frequent and strong. That is certainly the case with tourism. Last year, some 1.5 million Hong Kong people took in the splendour of Japan, a remarkable 65 per cent increase over the previous year. And the traffic is definitely not one way. About 500,000 Japanese visited Hong Kong in the first half of this year, up some 3 per cent, year-on-year. These continuing exchanges have surely enhanced understanding and friendship between us.

 

Culture, of course, adds to the attraction between our societies. In Hong Kong, Japanese culture pervades our everyday lives, and in a great many ways. Japanese pop songs and movies, Japanese food and drinks, as well as fashion and trend-setting electronics come immediately to mind.

 

And now, thanks to the Japan Autumn Festival, the people of Hong Kong get to revel in more than 130 uniquely Japanese events and happenings right through November – cuisine fairs, art exhibitions, film festivals, seminars and workshops – to name just a few.

 

Japanese visitors and travellers from all over the world, will get to delight in the dazzle of Hong Kong – our celebrated East-West culture, our warm hospitality and exciting calendar of events. Later this month, to take one cheering illustration, the annual Hong Kong Wine & Dine Festival opens against the stunning backdrop of Victoria Harbour – and with more on offer, more to toast to, than ever before.

 

The Wine & Dine Festival includes, I am pleased to note, a Japanese pavilion of 10 booths featuring Japanese wine, and another five booths shining a spotlight on inviting Japanese food. No doubt that these Japanese booths will be exceptionally popular, just like those selling Japanese whisky at last year’s Wine & Dine Festival.

 

My thanks to the Consul-General of Japan for staging the inaugural Japan Autumn Festival in Hong Kong. It will, no doubt, be a great success. And I am confident that it will deepen the bonds and ties that have long blessed our two economies, our two cultures, and our two peoples.

 

Acting Chief Executive Carrie Lam made these remarks at the opening ceremony of the Japan Autumn Festival in Hong Kong – Rediscovering Nippon on October 14.

 

 

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Fintech facilitates market: FS

Financial Secretary John Tsang

Hong Kong has been regarded as one of the best cities in the world to do business.

 

In May this year, Hong Kong was ranked the most competitive economy in the world by the International Institute for Management Development in Switzerland. Just last month, Hong Kong topped the annual Economic Freedom of the World Report published by the Cato Institute and the Vancouver-based Fraser Institute. Hong Kong has done so, by the way, every year since the report first came out back in 1996.

 

And the Washington-based Heritage Foundation did the same earlier this year – naming Hong Kong the freest economy in the world. If you are counting, that’s 22 years in a row now.

 

HK success not accidental

Such success, year after year, decade after decade, is not an accident. Rather, it speaks of the resourcefulness and tenacity of the people of Hong Kong.

 

It speaks, also, of Hong Kong’s advantage, built on our free and open market, the rule of law and an independent judiciary, our extensive trading and logistics network, our world-class professional services, as well as our money prowess as an international financial centre.

 

All of these, together with our level playing field and our simple and low tax regime, make Hong Kong the ideal breeding ground for start-ups. By the way, our profits tax is capped at a modest level of 16.5%, while the salaries tax at 15%. There is also no VAT, capital gains tax or inheritance tax.

 

Hong Kong is developing fast into one of the world’s most popular start-up hubs. Young and energetic entrepreneurs from around the world come to Hong Kong every day to look for opportunities to fulfill their aspirations and put their audacious ideas to test. Today, more than 1,600 start-ups in various stages of development are flourishing in Hong Kong. That is a 50% increase over the past two years.

 

We are working hard to build on those smart numbers and to maintain a vibrant and favourable ecosystem for start-ups.

 

Pro-startup measures in place

A host of measures, from precious seed funding to affordable office space, and from sound business advice to valuable access to investors, are in place to help kick-start these new companies to grow and to thrive.

 

The Hong Kong Science Park and the Cyberport, two major agencies promoting the development and application of innovative technologies in Hong Kong, are offering incubation programmes as well as seed funding for start-ups.

 

The Science Park is now home to more than 600 companies, from multinationals, SMEs to start-ups, and more than 40 of them are US companies. Many of the start-ups focus on robotics, development of smart cities as well as promotion of healthy ageing – all of which are areas of significant interest to Hong Kong.

 

We are moving ahead with a US$560 million expansion of the Science Park to provide more space and facilities for startups and technological companies.

 

We are fully aware of the vital importance of funding for start-ups. We are creating a US$260 million Innovation & Technology Venture Fund, partnering with venture-capital funds to invest in local technology start-ups. The fund is expected to get going in the first half of 2017.

 

Government aside, the angel investment scene is also gathering steam in Hong Kong. As an international financial centre, Hong Kong has been attracting a world of investors and capitalists looking for good investment opportunities and to tap the ever-expanding China market. They are here, for opportunities that are simply not available elsewhere in the world.

 

This is evident in the fact that Hong Kong is the world’s second-largest recipient of foreign direct investment in 2015, next only to the US, according to a UN report.

 

And the flow of institutional venture capital investment into Hong Kong is also encouraging. Last year, we took in US$325 million, according to the Hong Kong Venture Capital Association. That’s well more than double the US$139 million available in Hong Kong in 2014. Start-ups with good potential are certainly one of the investment targets of these venture capital.

 

HK’s bid to develop Fintech 

Apart from start-ups, we are also focusing on the development and application of Fintech, that would serve to ensure that Hong Kong remain a major international financial centre in this pervasive digital age.

 

I believe all of you in this room know all too well about how Fintech is creating a whole new world of possibilities for banks, for insurance companies, for traditional financial institutions, and even for telecommunication companies and e-commerce enterprises.

 

Some studies have predicted that global investment in Fintech will surge from US$12 billion in 2014 to more than US$46 billion in 2020. Just in the first quarter of this year, investors put some US$5.3 billion into Fintech ventures globally – that’s a 67% increase over the same period last year.

 

I also believe that you would agree that, given our deep talent pool of over 200,000 professionals with profound knowledge of financial services of the day, as well as our world-class infrastructure on information and communications, Hong Kong has what it takes to become a worldwide hub for Fintech.

 

And for all of you who are interested in joining us in building that hub, I am pleased to tell you that InvestHK, the government agency responsible for promoting foreign investment in Hong Kong, has just set up a dedicated team to assist overseas Fintech start-ups, investors and R&D institutions in establishing a presence in our city.

 

A dozen of overseas institutions, innovation labs, incubators and accelerator programmes have already found their way. And we expect to see good things coming out of their operations.

 

For example, Accenture, one of the leading global professional services companies in the world, has established a Fintech innovation lab in Hong Kong in 2014, following similar programmes that the company established in New York and London. And both the Commonwealth Bank of Australia and the Wearable IoT World Labs from San Francisco launched their innovation labs in Hong Kong at the beginning of this year.

 

I should also mention that the Massachusetts Institute of Technology, my alma mater, has just launched the world-renowned MIT Innovation Node in June this year in Hong Kong, to make good use of our capital rich and global network, and at the same time to harness the manufacturing prowess of neighbouring Pearl River Delta in southern China. The very same reason why so many technological Fintech and start-ups have chosen Hong Kong.

 

We have also rolled out a number of measures to boost Fintech R&D. Among others, we shall be creating a dedicated working space to support 150 Fintech start-ups over the next few years. We are also organising training camps in overseas universities to nurture the next generation of Fintech talent, and to drive development of various technologies, from cyber security to blockchain.

 

In creating a favourable and enabling environment for development of Fintech, we are at the same time putting in efforts to ensure that we maintain the right balance between facilitating market growth and protecting investors’ interests. Our financial regulators have established communication platforms with the local and international Fintech community, to better understand the views of Fintech users, developers as well as investors, and to facilitate collaboration among different parties.

 

The Fintech Facilitation Office, the FFO, is one such platform established by the Hong Kong Monetary Authority, our regulator for the banking sector. The FFO has been supporting the development and application of Fintech in Hong Kong through various initiatives.

 

Just last month, it launched the Fintech Innovation Hub that will be focusing on exploratory and experimental Fintech solutions, through the application of Big Data Analytics, biometric authentication and more. The Fintech Innovation Hub provides a controlled testing ground for Fintech users, such as banks, to work directly with the developers and explore together practical Fintech solutions that can meet their business needs in the actual operating environment.

 

Through collaboration of multiple parties, we envisage the Innovation Hub can help accelerate the R&D process of Fintech.

 

The Fintech Facilitation Office also launched its Cybersecruity Fortification Initiative earlier this year, which seeks to raise the level of cybersecurity of financial institutions using financial technologies. The finance sector and the law enforcement agencies will jointly develop risk assessment framework, intelligence-sharing platform as well as training programmes for cybersecurity practitioners under this Initiative.

  

There is still more from the HKMA. We have just announced the launch of a Fintech Supervisory Sandbox. The Sandbox is designed to facilitate financial institutions in Hong Kong to conduct trials of Fintech and other pioneering applications on a pilot basis, with some relaxation in the usual supervisory requirement. The real-life data and user experience gathered during the trials will provide valuable feedback for Fintech developers in refining their products or services before formal launch.

 

Fintech Week forthcoming

There is so much happening in Hong Kong right now, and that we are tempted to call 2016 “The Year of Fintech”. Don’t take my word for it. Check it out for yourself next month, from November 7 to 11, when Hong Kong hosts its first ever Fintech Week. There are lots to look forward to, including the Finovate Asia on November 8, which is a day-long, demo-presentation of some of the hottest banking and financial technology innovations out there.

 

Coupled that reassuring reality with technical expertise and start-up passion, I am confident that Hong Kong’s Fintech business will soon be making global waves.

 

Financial Secretary John Tsang made these remarks at the Fintech Breakfast Meeting in New York on October 12.

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HK advantages attract investors

Financial Secretary John Tsang

Apart from our shared passion for the one-of-a-kind game of Mahjong, Hong Kong and the US have long been the best of partners in trade, in business and in finance, and of course, in making money.

 

Hong Kong today is the world’s eighth-largest trading entity. Our total goods and services trade is equivalent to more than four times our GDP. And the US is our second-largest trading partner. As for Hong Kong, we are your ninth-largest export market.

 

Last year, Hong Kong bought US$37 billion worth of goods that were made right here in America. Products of every kind, from telecommunications equipment to fashion and jewellery, works of art and antiques to a welcome bounty of agricultural products.

 

Meat in particular. Last year, Hong Kong was the US’s fifth-largest market for beef and veal exports. Imagine that: just over seven million people, and yet Hong Kong is among the world’s largest consumers of American meat.

 

We welcome American companies, too. Indeed, some 1,400 US companies are operating out of Hong Kong, and nearly 90,000 people of US nationality call Hong Kong home. So it shouldn’t surprise anyone here when I tell you that the American Chamber of Commerce in Hong Kong is the largest international chamber in our city – and one of the largest business chambers outside the US.

 

In fact, companies, and capital, from all over the world are happy and flourishing in Hong Kong.

 

Last year, Hong Kong was the world’s second-largest recipient of foreign direct investment (FDI), right behind the US, according to a United Nations report. FDI inflows to Hong Kong amounted to US$175 billion in 2015, a year-on-year surge of 53.5%. I would say that reveals the confidence international investors and enterprises have in us, in Hong Kong. And I can tell you, we have worked hard to earn this.

 

Last month, Hong Kong topped the annual Economic Freedom of the World Report, published by the Cato Institute and the Vancouver-based Fraser Institute. Hong Kong has done so, by the way, every year since the report first came out back in 1996.

 

Earlier this year, the Washington-based Heritage Foundation did the same, naming Hong Kong the freest economy in the world – and for 22 years in a row.

 

More than freedom makes our business world go round. In May, Hong Kong was ranked the most competitive economy in the world by the International Institute for Management Development in Switzerland.

 

Such international kudos, year after year, reflect the free flow of capital and information, in and out of Hong Kong. They reflect, too, our rule of law, buttressed by an independent judiciary, our efficient market, our extensive logistics network, and our ruthless resolve in combating corruption.

 

Hong Kong is one of the safest cities in the world in which to live and work. Our crime rate, especially when it comes to violent crime, is low. Reassuringly so.

 

Our business playing field is absolutely level for all companies, wherever they come from, whatever they do. Providing, of course, what they do is legal.

 

Then there is our low and uncomplicated tax system, with profits tax capped at a cheering 16.5%. Salaries tax rings in at only 15%. And there is no capital gains tax, no inheritance tax, no VAT. Even beer and wine purchases are tax free in Hong Kong.

 

As you can see, there are plenty of attractive advantages in Hong Kong. Plenty of inviting reasons to look to Hong Kong for business.

 

Life is never so sweet in a single direction. There is, to be sure, some cross fire. Some observers, including a few international credit-rating agencies, suggested that the slowdown in China’s economy will create further downward pressure on today’s flagging global economy. 

 

And that because of Hong Kong’s close ties with the Mainland of China, we shall soon have to face the sobering consequences of the Mainland’s economic slowdown.

 

That is certainly not the way I see it. Economies everywhere have been hit with headwinds since the 2008 global financial crisis, and China can’t be the exception.

 

Even when China is now growing slower than before, it remains the major driving force of the global economy, contributing more than one quarter of the world’s economic growth.

 

In fact, China’s slower growth is not unexpected, not unreasonable, certainly not after the double-digit expansion it has enjoyed over the past 30 years or so.

 

More to the point, its growth target for 2016 is between 6.5% and 7%. And isn’t that the kind of economic nightmare we would all love to wake up to. Most of the finance ministers I know certainly would. In fact, they would be pitching a national parade for half of that.

 

So, yes, China – the world’s second-largest economy, the world’s largest trading economy, and the world’s largest manufacturer – remains a formidable force for growth. And it will continue to be so in this 21st century.

 

One reason for my optimism is the continuing structural changes going on in China – both the supply-side structural reform and, with it, the rising change in demand.

 

Increasing purchasing power, along with the expanding income of a growing middle class, is transforming China’s economic engine. Long an investment, export-led economy, China is now shifting, gradually and perceptibly, towards a consumption-driven economy.

 

Indeed, consumption expenditure is now China’s largest growth driver, accounting for more than 70% of its economic growth in the first half of this year.

 

As China’s economy becomes more services-led, the demand for high-end producer services is also growing. This is creating major opportunities for services providers around the world. And no one is better positioned to take advantage of this transformation than business in Hong Kong.

 

After all, Hong Kong has played a dynamic and critical role in China’s dramatic economic rise since it first began to open up, in the late 1970s.

 

Our competitive advantages in trade and logistics, together with our cultural connections, made us the key entrepȏt for China in its emergence as an export economy and global manufacturer.

 

The responsibilities continued to expand over the years. Soon enough, Hong Kong became our country’s essential intermediary in channelling foreign investment and capital to fuel its extraordinary growth. Today, Hong Kong is China’s international financial and professional services centre, helping to open up its capital accounts and internationalising its currency, the renminbi, in the process.

 

Hong Kong is the world’s leading offshore renminbi business hub. We hold the largest offshore renminbi liquidity pool, counting some 750 billion yuan at the end of July. In the first half of this year, some 70% of the world’s renminbi payment transactions were processed in Hong Kong.

 

And about a week ago on October 1, the renminbi became the fifth currency that has been included in IMF’s (International Monetary Fund) SDR basket. That will surely mean a more central role for the renminbi in transactions of global trade and investment.

 

No less important, the renminbi’s IMF inclusion – along with the US dollar, the Japanese yen, the Euro and the British pound – is a milestone in the Chinese economy’s integration into the global financial system. It is also a resounding opportunity for Hong Kong. 

 

Our deepening economic integration with China, of course, goes well beyond our dominant role in the renminbi’s internationalisation.

 

Next month, the Shanghai-Hong Kong Stock Connect turns two years old. And the Shenzhen-Hong Kong Stock Connect is expected to be launched soon as well.

 

Together, they will serve to enhance mutual market access between the capital markets of Hong Kong and the Mainland. They will also accelerate the opening-up of China’s capital markets to the world, while boosting the renminbi’s global acceptance.

 

There’s more: the Mainland-Hong Kong mutual recognition of funds arrangement, now just over a year old, is finding good market response.

 

That unparalleled ability to serve as the critical intermediary between the Mainland and the rest of the world continues to create enormous opportunities for Hong Kong.

 

I can tell you that opportunities don’t get much bigger, more visionary, than China’s Belt & Road Initiative. The far-reaching scheme seeks to deepen economic ties and infrastructure connectivity between some 65 countries in Asia, Europe and Africa. Railways, highways, ports, power plants, dams and more will drive the Initiative’s future.

 

The scheme encompasses two thirds of our planet’s population and accounts for one third of global GDP, as well as one third of the world’s merchandise trade. 

 

In short, it may well be the defining multilateral undertaking of this 21st century.

 

According to the Asian Development Bank, Asia requires US$800 billion a year to cover infrastructure investment needs from now to the year 2020.

 

The Belt & Road Initiative is about integration, connectivity, trade and investment, as well as people-to-people bonding. With our international and friendly business environment, our sound and robust market structure, as well as our unparalleled connectivity with the rest of the world, Hong Kong can surely play an important role in this ambitious undertaking.

 

Indeed, as a truly globalised metropolitan centre at the heart of Asia, Hong Kong has the requisite experience, we have the requisite expertise, as well as network to serve as the centre for the fundraising, project financing and asset-management for all the big-ticket items. 

 

Our world-class talents, in accounting, architecture, urban planning, engineering management and more, can certainly help meet the huge demand for high-end professional services arising from the planning, implementation and operation of the Belt-Road projects.

 

And our proficient and efficient logistics network can only further enhance our case. Hong Kong is located within five hours’ flying time of half the world’s population. Each day some 1,100 flights connect Hong Kong with hundreds of key destinations around the world. And our airport and ports are among the busiest and most efficient out there.

 

As I see it, Hong Kong is on its way to becoming the Belt-Road’s vital investment and financial-services hub. The bridge between China and the world. A golden bridge.

 

And we look forward to working with you – with American companies, capital, investors and professionals.

 

Financial Secretary John Tsang gave these remarks at a reception hosted by the China Institute in New York.

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HK gateway to Mainland market

Financial Secretary John Tsang

Looking for Asia some 500 years ago – and without some sort of GPS – Columbus and his flotilla found themselves instead in the New World. That set in motion a new global economic order that would play out for centuries.

 

Indeed, the advanced western economies have been dominating the global economic landscape for a long, long time. While they have their fair share of ups and downs along the way, they were always able to recover from these cyclical regressions and get back to the rising trajectory. However, the traditional economic powerhouses of the West seem to have run out of ideas this time round in the aftermath of the 2008 global financial crisis.

 

Mr Alan Greenspan, the former Chairman of the Federal Reserve, described in 2008 that the world economy was in a “once-in-a-century crisis”. I guess he was surprised, and so did everybody else basically, that the global economy has hardly recovered at all after all these years.

 

The global economy, as we speak, is still struggling, and the prospect is seemingly bleak. The latest economic data of the US contain mixed messages about the health of its economy, while the economies of the Eurozone and Japan are still worryingly fragile.

 

And then we have the anxieties over the timing and the pace of the US interest rate hike, the divergent policies among major central banks, the geopolitical conflicts in different regions, as well as the uncertainties arising from Brexit. We seem to have all the necessary ingredients for a perfect storm.

 

Amid the slow and punctuated recovery of most of the advanced economies in the West, Asia has picked up quickly and has taken over the driving seat of the global economy.

 

In 1980, developing Asia accounted for 7% of the world GDP at current market exchange rate. By 2015, it had captured more than 20%.

 

Of the top 500 global companies ranked by Fortune in 2015, 190 were Asian-based; that was up by some 60% from just a decade ago.

 

Leading the way is the Mainland of China. Since the beginning of its opening up in the late 1970s, the Mainland’s economy has ascended in a phenomenal way to become the world’s second-largest economy, the largest trading economy as well as the largest manufacturer of goods. China’s GDP actually expanded nearly 30 times in real terms from 1978 to 2015.

 

China is currently the major driving force of the global economy, contributing over a quarter of the world’s economic growth in recent years.

 

Apart from the Mainland, the economies of the ASEAN countries and India have also expanded, on average, better than 6% per year, far outstripping the performance of major advanced economies in the West.

 

In its latest report, the IMF has lowered its forecast of global growth in 2016 to 3.1%, with 60% of the growth coming from Asia. And that trend will continue, with growth in Asia expected to average 6.3% a year in the next five years, markedly higher than the 3.7% predicted for the world over the same period.

 

What we are witnessing, is a perceptible and persistent shift of the global economic centre of gravity moving from the West to the East.

 

While the prominence of Asia and China in the global economy is being recognised, some observers out there, including a few international credit rating agencies, have been suggesting that the slowdown of China’s economy in recent years will create strong spillover effect and add further downward pressure to the global economy that is already weak.

 

And there are views also that given the close ties between Hong Kong and China, Hong Kong too, is facing a negative outlook.

 

I do not see it that way. Economies around the world have been facing substantial headwinds in recent years, in fact, since 2008, and China cannot be an exception in this issue. And the slower growth rate of China’s economy is not unexpected and not unreasonable, after the double-digit spurt that it enjoyed in the past 30 years or so. It is normal that the second largest economy in the world cannot continue to grow at that pace.

 

And its growth target for this year – at 6.5% to 7% – would surely ignite calls for a year-end parade in most countries. With the Finance Minister likely basking in a float of his own, and hoping for just half of that growth rate.

 

With its large fiscal reserves, I believe that China has sufficient policy levers that can be pulled to guide the economy in moving forward. Apart from the host of monetary measures that it can deploy, China is also adapting a more proactive fiscal policy, putting forward a larger deficit budget in 2016 than the previous year, with a view to supporting enterprises and stabilising growth.

 

As President Xi highlighted at the G20 Leaders’ Summit staged in Hangzhou last month, China would ensure to deepen its structural reform, to continue to open up its market and to further integrate into the world economy. China is confident and capable of maintaining medium-to-high-speed growth, and it will continue to be the growth engine of the world in the 21st century.

 

You can see the progress of Mainland’s reform in its changing demand composition. Increasing purchasing power, along with the expanding income of a growing middle class, is transforming China from an investment, export-led economy towards a consumption-driven economy. In the first half of this year, consumption expenditure accounted for more than 70% of the Mainland’s economic growth. That’s an important aspect that we need to recognise.

 

China has also been successful in catalysing economic growth through the buttressing of innovation and the application of technology in the real economy.

 

China nowadays is more than just the world’s factory. It is also a worldwide leader in e-commerce as well as an international hub for advanced telecommunication technologies and manufacturing. The surge of start-ups in the IT and software sectors, coupled with the rising investment in research and development, will provide further fuel for this new growth engine.

 

As the role of services in the Mainland grows in importance, so too, does the demand for high-end services. This is creating major opportunities for services providers around the world. And no one is better positioned to take advantage of this transformation than the businesses in Hong Kong.

 

Hong Kong has been a dynamic and critical player in China’s economic evolution since the late 1970s. We have long been our country’s vital intermediary, channeling foreign investment and capital to fuel Mainland’s extraordinary growth.

 

Hong Kong is also playing a big part in the internationalisation of renminbi.

 

We are, by far, the world’s leading offshore renminbi business hub, with a mature range of services from trade settlement and foreign exchange trading and hedging, to financing and investment. We count the largest offshore renminbi liquidity pool at some 750 billion yuan at the end of July. And, in the first half of this year, some 70% of the world’s renminbi payment transactions were processed in Hong Kong.

 

That’s sure to soar in the coming years thanks, in part, to the IMF’s decision to add the renminbi to its SDR basket starting from the beginning of this month. I would say that’s a milestone in the Chinese economy’s integration into the global financial system, as well as a providential opportunity for Hong Kong. One you can be sure that we shall run with.

 

In addition to our renminbi business, other initiatives such as the existing Shanghai-Hong Kong Stock Connect and the upcoming Shenzhen-Hong Kong Stock Connect, as well as the Mainland-Hong Kong mutual recognition of funds arrangement, will help enhance mutual market access between the capital markets of Hong Kong and that of the Mainland, and accelerate the opening-up of China’s capital markets to the world.

 

Hong Kong, of course, is a dynamic presence beyond the Mainland. Hong Kong is an international commercial, trade and financial centre serving the world.

 

Indeed, Hong Kong has been attracting investors and capitalists from every corner of the planet who are looking for good investment opportunities and looking to tap the ever-expanding China market. They are here, for opportunities that are simply not available elsewhere in the world.

 

This is evident in the fact that Hong Kong is the world’s second-largest recipient of foreign direct investment in 2015, next only to the US, according to a UN report. It is evident also from the fact that nearly 8,000 overseas and Mainland companies keep their offices here in Hong Kong. And more of them are coming here every year.

 

We are doing our utmost to maintain our favourable business environment, which is built on our free and open market, the rule of law and an independent judiciary, our extensive trading and logistics network, as well as our level playing field and simple and low tax regime.

 

We shall continue to expand our trading and commercial networks throughout the region with the emerging Asian economies. We are aiming to conclude the negotiations towards a free trade agreement between Hong Kong and the ASEAN bloc by the end of this year. The resulting liberalisation measures are expected to help expand prospects of Hong Kong businesses in ASEAN, which is our second largest trading partner with a population of over 600 million people.

 

We are also readying ourselves to take our place in the grand and visionary Belt & Road Initiative that may well be the most ambitious multilateral undertaking of the 21st century.

 

The far-reaching scheme, spearheaded by China, seeks to deepen economic ties and infrastructure connectivity between some 65 countries in Asia, Europe and Africa, in the form of railways, highways, ports, power plants, dams and more.

 

The two corridors of the Belt & Road Initiative encompass two thirds of our planet’s population and account for a third of global GDP and a third of the world’s merchandise trade.

 

As an international financial centre, Hong Kong possesses the expertise, the experience and the connections – with the Mainland and the world at large – to serve as the fundraising, financial management and information hub for the Belt-Road projects.

 

Hong Kong has all it takes to play a central role in delivering as well as in realising the massive potential of Asia and China. I am confident that Hong Kong will play an even more important role in the days to come in the long-term ascendancy of Asia and China.

 

There is clear synergy and advantages for Hong Kong and the US to further expand our business collaboration, and in seizing the enormous opportunities ahead.

 

Financial Secretary John Tsang gave these remarks at America China Public Affairs Institute Luncheon in New York.

via Moroccan Trader HK gateway to Mainland market

FS urges youths to grasp opportunities

Financial Secretary John Tsang

But I am sure, with the way that the news has spread around nowadays that you know quite well what is going on in Hong Kong. As you know that since the financial crisis in 2008, everything has slowed down, and even the growth of economy in Hong Kong has slowed down quite substantially. This year we are looking at a growth rate of about 1 to 2 per cent, so it is really not a very fast growth rate. But fortunately, we have been able to keep unemployment at a low level. It is now at 3.4 per cent. And we have been keeping that low level of unemployment for quite a long time. And we are extremely lucky that we have been able to do that.

 

And looking forward, I think we will need to work harder because competition is becoming keener everywhere. So we look forward to a lot of young people who are educated here with huge expertise to come join us somehow in Hong Kong. As there is plenty opportunity, as the economic centre of gravity has shifted to the East, I think more and more opportunities will be found in the East. And Hong Kong is one of the best platforms that you can find great opportunities.

 

We are the gateway, not just to the Mainland of China, but also to the rest of Asia. We will be completing Free Trade Agreement with the ASEAN (Association of Southeast Asian Nations) countries. They have 10 countries with 600 million population. So the potential is massive. And now with the vision of President Xi in building up the Belt & Road Initiative, this is another opportunity that we hopefully will be able to grab hold of, and I think that will pose a lot of opportunities.

 

So I look forward to talking with some of the young people here, some of the professionals here. And perhaps you can find an opportunity to see for yourself what is in Hong Kong, what opportunity is there for you all to see. So I am very glad to have an opportunity to meet everyone, and hope that I will have an opportunity to have a short chat with you later on. So, thank you very much.

 

Financial Secretary John Tsang gave these remarks at the New York Chinese Community Luncheon in New York, the United States.

via Moroccan Trader FS urges youths to grasp opportunities

HK ePrix showcases Asia’s world city

Chief Executive CY Leung

It gives me great pleasure to join you today to kick-off the FIA Formula E Championship – Hong Kong ePrix, a sporting first for our city.

 

This world-class motorsports event is sure to give spectators a thrilling experience, as they cheer drivers racing around the Central Harbourfront circuit, in full view of Hong Kong’s spectacular harbour and the skyline of spectacular architecture and mountains.

 

I have been looking forward to this – if I may – electrifying event. Announcing the Championship exactly a year ago to the day, I said it was a dream that the Hong Kong Government co-owns – to see Formula E cars racing through the streets of our city. So when Mr Yu, Mr Yu Kam-kee, approached me three years ago – about the possibility of organising an ePrix in Hong Kong – we welcomed this suggestion with open arms.

 

Over the past two years, the Tourism Commission of Hong Kong Government, together with more than a dozen government bureaux and departments, had worked closely with the organiser towards realising this common dream. And here we are now – thanks to the good of work of all – to see the action, to see the dream come true.

 

The Championship – a perfect blend of motorsports and entertainment – will no doubt become another signature event in our sport calendar. I was pleased to learn that the organiser and the tourism sector developed packages for visitors to enjoy the race. I encourage our overseas friends and visitors to also make time to experience everything that Hong Kong, Asia’s world city, has to offer.

 

The Formula E Championship is one among other celebrated events in the “Hong Kong Sports Month” line-up, which includes the Hong Kong Tennis Open, Hong Kong Triathlon and Harbour Race, all enhancing Hong Kong’s status as a sporting hub in the region, and a premier tourist destination worldwide.

 

Chief Executive CY Leung gave these remarks at the 2016 FIA Formula E Hong Kong ePrix opening ceremony on October 9.

 

via Moroccan Trader HK ePrix showcases Asia’s world city