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Chief Executive CY Leung
This year's theme is "Asia: Driving Change, Innovation & Connectivity". The three key words here are "change", "innovation" and "connectivity". Hong Kong happens to have something to share on all these.
"Change". This year is a special one as it marks the 20th anniversary of Hong Kong's return to China. And we have changed a lot since then - definitely for the better.
We have scaled new heights because of our ability to change, to adapt to circumstances, and to seize emerging opportunities. And that means taking full advantage of the "one country, two systems" arrangement, which came into force 20 years ago, as well as the opening up and reform of the Mainland of China, which has a slightly longer history.
"One country, two systems" is an innovative constitutional arrangement. Back in the 1980s, when we prepared for Hong Kong's return to China, many people had doubts on whether "two systems" in "one country" would work. In other words, whether the Hong Kong system would survive the change in 1997, as our legal system, our passport, and our currency for example, are all different from the Mainland's.
Today, no one questions "one country, two systems", "one country, two currencies", "one country, two legal systems" or "one country, two passports". If anything, we only stand to gain from "one country, two systems". It has become our strength, our niche. It enables our city to enjoy the best of both worlds. We are part of China and enjoy the "China advantage", benefitting from all the opportunities that come with the Mainland's development. At the same time, we practise, so to speak, "the other system" that is separate from the Mainland cities. We enjoy the free movement of trade, capital and information, the rule of law, as well as a simple and low tax regime.
Super-connecting China and the world
The combined advantages of "one country" and "two systems" have made us the "super-connector" between the Mainland of China and the rest of the world. Certainly in finance, one of Hong Kong's greatest strengths. The Shenzhen-Hong Kong Stock Connect launched last month is a fine example of how our super-connector role can benefit all - Hong Kong, Shenzhen, the whole of Mainland, as well as investors from all over the world.
"One country, two systems" will continue to be our cutting-edge as we forge ahead. For sure, the global economic outlook is less than rosy. Growth is generally sluggish. The world is still adjusting to Brexit and the change of leadership in the United States. Doubt is cast on the future of the European Union, globalisation and free trade.
But for Hong Kong, we can take heart in our strengths. Our economy and the financial market remain solid. We have moderate growth, low inflation, full employment, and a sound fiscal position. And, no less importantly, our country remains one of the fastest growing economies in the world, and a staunch supporter of free trade.
The world's freest economy
And Hong Kong remains a level-playing field for all. The government here does not compete with businesses as we don't have government-linked business corporations. So you can understand why the Washington-based Heritage Foundation has named Hong Kong the world's freest economy for the past 22 years. And why, last November, we were ranked the world's freest city for six years in a row in the Human Freedom Index co-published by the United States' Cato Institute and Canada's Fraser Institute. We also topped the ranking in the 2016 World Competitiveness Yearbook published by Switzerland's International Institute for Management Development. All these show that our economic, and other kinds of freedom - the key to competition, innovation and entrepreneurial success - are highly valued by us and the international community alike.
But we need to get the most out of our niche - we need to expand our super-connector role, in terms of magnitude, sector as well as value. In 1993, when Tsingtao Beer became the first Mainland enterprise to be listed in Hong Kong - it raised less than US$130 million. Thirteen years later, the gigantic ICBC - Industrial & Commercial Bank of China - raised 120 times that amount.
And now we super-connect also in other sectors. And that brings me to the subject of "innovation".
Today's growth engine - for Hong Kong and the world at large - is innovation and technology.
I&T is high on the policy agenda of my Government. We established the Innovation & Technology Bureau some 14 months ago, and injected a massive US$2.3 billion for promoting I&T. The funding will support start-ups together with private venture capital funds, drive R&D in universities, expand I&T infrastructure, and develop Hong Kong into a smart city.
Magnet for global technology firms
Our efforts have attracted the attention of top institutions around the world. Last year, the Massachusetts Institute of Technology announced its first overseas "Innovation Node" in Hong Kong. Sweden's Karolinska Institutet - a leading medical university that selects Nobel laureates in physiology or medicine - opened its first overseas reparative medicine centre in the Hong Kong Science Park. World-renowned venture capital firm - Sequoia Capital - launched a Hong Kong X-Tech Startup Platform to help enterprising youngsters achieve success. The idea is to bridge the gap between innovative research and real applications, by bringing together R&D, funding and entrepreneurial experience through the Hong Kong X-Tech Platform.
They chose Hong Kong because of our ability to super-connect - between the rest of China, and the rest of the world. As pointed out by the MIT President, "by bringing MIT to Hong Kong and Hong Kong to MIT, the Innovation Node will deepen MIT's activities in Hong Kong and, through Hong Kong, in the entire Pearl River Delta region".
And we have another example. Two weeks ago, the Hong Kong Government and the Shenzhen Government signed an agreement to jointly develop the Lok Ma Chau Loop, an 87-hectare area on the Hong Kong side of the border with Shenzhen on the Mainland of China, into a Hong Kong/Shenzhen Innovation & Technology Park. When completed, it will be a key I&T research base - not just for Hong Kong, but also for enterprises and research institutes from Shenzhen, other parts of the Mainland, and the rest of the world.
In Fintech, as well, Hong Kong can be a platform bringing people and ideas together. Last November, we held our first ever Fintech week, attracting 2,500 participants from international Fintech companies, start-ups and investors. The Hong Kong Monetary Authority, together with ASTRI - the Hong Kong Applied Science & Technology Institute - has set up a Fintech Innovation Hub for testing industry-wide Fintech solutions. Our Cyberport also launched in December the Smart-Space Fintech, a co-working space providing some 4,300 square metres for Fintech activities. We look forward to hearing from you on how Hong Kong can better support Fintech development.
China's Belt & Road Initiative is a grand project for building up connectivity among more than 60 countries on three continents. Hong Kong, as a super-connector, has much to offer in this ambitious, multi-level and multilateral initiative including, of course, our financial services.
Financial hub for the Belt & Road
We are, after all, a major financing hub with one of the world's most sophisticated capital markets and largest stock exchanges. We are also the world's largest offshore renminbi hub, handling 70% of global offshore renminbi payments. Now that the currency is added to the International Monetary Fund's Special Drawing Rights basket, the renminbi has gained increasing popularity as a trading and an investment currency. Our asset and risk management services, as well as corporate treasury services capabilities, complement our renminbi strengths. Adding all these up, and Hong Kong has what it takes to become the full-service financial centre for the Belt & Road.
To take full advantage of the Belt & Road opportunities, the Hong Kong Government is building up support for our companies and professionals.
Last year, a dedicated government Commission - the Belt & Road Commission - was set up to devise and implement strategies under the Belt & Road; and we are in discussion with the Asian Infrastructure Investment Bank on joining the institution as a non-sovereign territory.
The Infrastructure Financing Facilitation Office, under the direction of the Hong Kong Monetary Authority, offers a one-stop shop for infrastructure investment and financing. To date, more than 50 partners have joined the office, including development banks, public and private sector investors, project developers, operators and professional service providers. I encourage you to join us, to partner with us in riding the Belt & Road opportunities.
Chief Executive CY Leung gave these remarks at the opening ceremony of the 10th Asian Financial Forum "Asia: Driving Change, Innovation & Connectivity" on January 16.
