September 13, 2011

Chief Executive Donald Tsang

It is always a great pleasure to meet with members of the Hong Kong Association - it is really just like a family get-together. Alas, this will be my last speech to the association as Chief Executive, and as the Bard once noted, "Parting is such sweet sorrow."
 
I have been speaking at Hong Kong Association gatherings now for some 15 years and I have always appreciated - I should say, I am always touched by - the level of interest in Hong Kong and your willingness to promote our cause.
 
I want to thank the association most sincerely for all the good work you do for Hong Kong, for all the support you have rendered, and for all the care and concern you have shown for our city and community over the years. We are lucky to have such a great group of supporters here in the UK quietly cultivating links of trade, business and friendship.
 
I've been in London now for a couple of days and I can't help but feel the sense of anticipation about the Olympic Games next year.
 
It reminds me of the excitement we felt in Hong Kong in the build-up to the Beijing Olympics. Some of you will remember that we had the honour of hosting the Olympic Equestrian Events in 2008, and we still hold many fond memories of that special time.
 
In a little less than a year, athletes, officials, tourists and spectators from around the world will descend on this remarkable city for the 2012 Olympic Games. I am sure it will be a roaring success.
 
Hong Kong, China, will be sending a team. If any of you are lucky enough to get a ticket to the opening ceremony, please make sure you save your loudest cheers for when the Hong Kong team enters the stadium waving our Bauhinia flag!
 
HK’s unique status
Individual membership of the Olympic movement is just one example of Hong Kong's unique status on the international stage. So too is our individual membership of the World Trade Organisation (WTO), the World Customs Organisation, APEC, the Bank for International Settlements, the Asian Development Bank and the International Maritime Organisation, just to name a few.
 
All of these are highly visible symbols of ‘One country, two systems’ at work. And that's what I want to talk about today - how ‘One country, two systems’ has worked so well for Hong Kong.
 
I know that many of you are very familiar with ‘One country, two systems’. But I have chosen this topic because I do believe that, 14 years after the reversion of sovereignty, many people are only just starting to fully understand what it means for Hong Kong, and what it means for China.
 
After a bit of a tentative start, we are getting into our stride in terms of the profound impact that ‘One country, two systems’ has had and will have for Hong Kong moving forward.
 
Mainland’s status rising
Hong Kong has had close family and cultural links with our country for millennia, and our history as a British administration was rooted in trade with China. But all of the links with the Mainland really started to grow when China launched its opening up and reform drive in 1978. They took on a whole new meaning and significance with the reversion of sovereignty in 1997. And in recent years they have accelerated to accommodate the Mainland's growing economy and rising status in global trade, finance and business.
 
In recent years, we have seen record levels of cross-boundary investment, we have welcomed record numbers of Mainland visitors, and we are attracting some of the best and brightest Mainland students to our world-class universities.
 
Hong Kong entities have for some time been the largest external investors in the Mainland, with realised investments of almost US$460 billion by end-2010. Mainland entities are now the largest external investors in Hong Kong - with US$340 billion worth of investments by end-2009. Together, that represents a US$800 billion investment in each other's future.
 
So, there are huge business-to-business links, with quite a lot concentrated in neighbouring Guangdong Province. Many of those investments in the Mainland have helped upgrade and modernise the physical infrastructure and cityscape, as well as products and services. That investment has been a positive force in the Mainland, and this great benefit is sometimes overlooked.
 
Government to government links grow
Since 1997, government-to-government links have also grown and deepened considerably. In the past 14 years we have welcomed more than 19,000 official delegations from the Mainland, and we have sent more than 21,000 official delegations to the Mainland. Last year we averaged 25 delegations a week from the Mainland, and sent 32 delegations a week to the Mainland.
 
There has been significant transfer of knowledge and experience. The more we learn about each other, the more we understand just how closely our futures are intertwined and just how much is at stake for our country and for Hong Kong.
 
These links grow by the day and are the result of hard work, mutual respect and understanding, and above all, a desire to become a better place for all our people to live, work and enjoy a high quality of life.
 
Barriers to cross-boundary trade have also been progressively broken down, and this process is also accelerating. The Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, was implemented in 2004. This unique free trade pact was made possible because both the Mainland and Hong Kong are members of the WTO.
 
CEPA has opened up the door to unprecedented new opportunities and vast markets for our business people to explore - and this includes all international companies in Hong Kong that meet the various access requirements.
 
Fresh opportunities
We are working on Supplement VIII to CEPA, which will provide even greater opportunities for Hong Kong service providers in the Mainland market - and there are many British businesses in Hong Kong that would qualify. This latest enhancement to CEPA will be a stepping stone to the complete liberalisation of trade in goods and services between Hong Kong and the Mainland by 2015.
 
Last year we also signed the Framework Agreement on Hong Kong-Guangdong Co-operation. This agreement further opens the gates to cross-boundary trade, finance and investment as well as ideas, innovations and new technologies with Guangdong.
 
It establishes Hong Kong and Guangdong as bridgehead partners to accelerate and test further liberalisation measures before they are tested or implemented in the rest of the country.
 
Hong Kong and the Pearl River Delta are spearheading the reform and opening up drive so our national leadership can better assess what works and what does not work in the Mainland context. It is typical of the step-by-step approach that the Mainland has been taking with its opening up and reform efforts. But we can see that momentum building as a response to the current global economic difficulties.
 
Competitiveness bolstered
During a visit to Hong Kong last month, China's Vice-Premier Li Keqiang announced a package of more than 30 measures that will further strengthen Hong Kong's competitiveness as the premier international gateway to the Mainland, and as the best partner for Mainland businesses looking to expand their horizons in the global market.
 
There will be huge opportunities for Hong Kong firms, and for British businesses in Hong Kong. Banking and financial services in particular will benefit from these measures as our country's efforts to internationalise the renminbi expand and gather pace.
 
During that visit, Vice-Premier Li also made specific mention of Hong Kong's "irreplaceable role" in China's reform, opening-up and modernisation drive, as well as the Mainland's firm and concrete support for Hong Kong's prosperity and stability. If you pardon the cliché, it is a win-win for both sides. All of this has been made possible because we now belong to ‘One country’.
 
But our benefit and value to ‘One country’ - our irreplaceable role - is firmly rooted in our different systems, our different experiences, our different outlook and our different way of life. And all of these are protected by the Basic Law, our constitutional document.
 
As many of you know, that means we have our own tried and trusted common law legal system, our independent judiciary, our own highly respected Police Force, our own immigration and customs regimes, a world-class anti-corruption agency and a clean administration. We have our own financial system, our own currency, low taxes, and the free and unfettered flow of information.
 
Blueprint for development
What's significant about the Basic Law is that it is not just a law for Hong Kong, it represents the national policy on Hong Kong. It is a blueprint for our future social, political and economic development as well as a shield around our value systems. And that's why we must guard it fervently.
 
At the same time, we must ensure that we bring into full play all of the advantages we have as a Special Administrative Region of China. My job as Chief Executive is not only to ensure the prosperity and stability of our society - it is also to ensure that Hong Kong can play the fullest and most appropriate role possible in our nation's development.
 
That is why the inclusion, for the first time, of Hong Kong and Macau in the 12th Five Year Plan - our nation's economic roadmap for 2011-2015 - is such a pivotal moment for both the Hong Kong and Macau SARs.
 
The separate chapter stresses the need to enhance Hong Kong's competitive advantages, including our position as an international financial, trade and shipping centre, and supports our development as an international asset management centre and an offshore renminbi business centre.
 
Deeper economic co-operation
It also supports Hong Kong's emerging industries to extend their scope of co-operation and services in the Mainland. This will help us further improve the structure of our industries and provide a broader source of economic growth. And it signals deeper economic co-operation between the Mainland and Hong Kong through CEPA and the Framework Agreement with Guangdong I just mentioned.
 
All of this will not only help expand Hong Kong's economic hinterland, it will boost the development of the services sector and enhance the overall competitiveness of the Pearl River Delta and beyond.
 
This is also a very clear manifestation of ‘One country, two systems’ at work, which is also a tremendous vote of confidence in Hong Kong - in what we have achieved so far, but more important in what we can achieve together moving forward.
 
It has been a tremendous honour to have served the people of Hong Kong as Chief Executive - and in all of my previous roles since joining the Government back in 1967.
 
HK people tenacious, resilient
I have witnessed turbulent and unsettling times, and have shared joyous and historical moments. Our community has endured natural disasters and fought off dangerous diseases. Our markets, having been up and down like a roller coaster at times, and today ranked among the most respected and competitive in the world, are anchored on a triple-A credit rating.
 
But one thing always shines through and that is the resilience and tenacity of Hong Kong people. No matter what, we always bounce back - wiser, stronger and with renewed hope and vigour.
 
It is certainly true that we have been blessed with a unique location and history and possess skills and connectivity that are incredibly valuable assets for Hong Kong and our country. We are poised to play an even more important role in our nation's development at a time of shifting sands in global markets, and turning tides of social and political influence.
 
As I look back on almost 45 years of public service, at our glistening skyline and superb infrastructure, at the talent and drive of our people, at the enthusiasm and creativity of our youth, I am sure that the best is yet to come for Hong Kong.
 
Chief Executive Donald Tsang gave this address at the Hong Kong Association Membership Lunch in London.