In traditional Chinese culture, the dragon symbolises goodness, prosperity and fortune. With rapid modernisation, the economy of Mainland China is like a flying dragon. It was the fourth largest in terms of GDP in 2005, and is growing fast - currently at around 10% a year in real terms, much faster than many developed economies.
The fastest growing part of China is the Pearl River Delta Region, known as the "factory of the world", where every day more than US$620 million worth of goods are produced for export to all corners of the globe. Hong Kong is recognised as the perfect springboard for the rising Dragon to launch herself into the regional and international marketplace.
In his annual Policy Address delivered last week, Chief Executive Donald Tsang remarked that, "Globalisation and the rise of China are now synonymous - adapting to globalisation and integrating with the Mainland are not two contradictory paths of development for Hong Kong." It is clear that Hong Kong should and will continue to leverage our close relationship with the Mainland to help fuel China's economic growth, and benefit from its success.
As an international financial centre, Hong Kong is best placed as the premier capital-formation centre for Mainland enterprises. Indeed, Hong Kong is giving full play to her financing role for outward-looking Mainland enterprises to access international capital.
Following the first H-share listing in 1993, there are now about 350 Mainland enterprises listed on our stock exchange, raising more than US$160 billion. This is, of course, a mutually beneficial process. The IPO activities relating to Mainland enterprises - such as, the recent successful debut of China Merchants Bank - have created a critical mass of investment assets, attracting leading global fund houses to Hong Kong for related opportunities.
Effective channel for Mainland capital
We are assisting not only Mainland enterprises to reach out, but likewise providing an efficient and effective channel for Mainland capital. The Central authorities announced in April this year measures to allow investment in financial markets outside the Mainland through qualified institutional investors. Under the new measures, the huge savings on the Mainland will become a driver for Hong Kong's asset-management industry to grow stronger, broader and deeper.
At a forum in Hong Kong last month, the Chairman of the China Banking Regulatory Commission, Liu Mingkang, mentioned that the number of high-net-worth individuals on the Mainland had been increasing significantly over the past few years. The number of Mainland residents with current assets of over US$1 million grew by about 7% last year to about 320,000 people.
With Hong Kong's strong financial intermediary services and efficient multi-currency platform, we are the preferred financial centre for channelling outflows of funds from the Mainland. The potential of our asset-management industry is remarkable.
Our co-operation with the Mainland is more than just about investment or money flow, but also about modern management and know-how. Mainland enterprises look to list in Hong Kong not only for funding, but also for raising their corporate governance standards, for the associated credibility and quality stamp, and recognition by international investors.
Greater role for HK financial industry on Mainland
In this regard, we are determined to further increasing the presence of Hong Kong financial institutions in the Mainland market, so as to enable the Mainland market to move up the value chain. For example, the planned convergence of the Mainland's accounting standards with the International Financial Accounting Standards in the year to come will present exciting opportunities for accounting professionals in Hong Kong, who are familiar with the Mainland situation, yet are equally familiar with international standards.
The Hong Kong Government's role is facilitation: to remove hurdles barring market access and promote market development. The Hong Kong Government has concluded a free-trade agreement with the Mainland, known as the Closer Economic Partnership Arrangement. Through CEPA, banks, securities companies, insurance companies, accounting firms, and other services companies are allowed first-mover access to the Mainland market, ahead of China's WTO commitments.
I just led a financial services delegation to Changsha of Hunan Province last month, providing yet another opportunity to promote among leaders and businesspeople on the Mainland the first-class financial services that Hong Kong readily provides. We also look forward to hosting the Asian Financial Forum next year to highlight Hong Kong's opportunities and strengths as an international financial centre.
HK included in China's 5-year plan
Hong Kong's unique and irreplaceable role is well recognised by our country. The future growth of China's manufacturing capability and economy will have to be sustained by a strong international financial infrastructure. Hong Kong is perfectly positioned to fulfill that role.
Under the "One country, two systems" principle, the Motherland has included Hong Kong in the 11th Five-Year Plan, supporting Hong Kong's financial-services sectors and preserving Hong Kong's status as an international financial centre. Enjoying strong links with our hinterland, we offer free flow of goods, services, capital, people and information, together with the rule of law, a level playing field, and global regulatory standards.
Against the backdrop of China's National Five-year Plan, our Chief Executive personally convened a high-level economic summit to chart our economy's way forward. David Li, one of the keynote speakers of this conference, is leading a Focus Group on Financial Services to consider a number of strategic recommendations, including the improvement to the listing regulations, diversification of financial products, and further development of Hong Kong's insurance and reinsurance industries.
Building on our strengths, these and other Government and private-sector initiatives will continue to contribute to the Mainland's growth and financial reform. We are proud and humbled to play our part. We are committed to its success and the best is yet to come.
Secretary for Financial Services & the Treasury Frederick Ma gave this address at the 10th CPA Australia - Asian Regional Conference.
