Our city and our region's relative resilience to the global financial crisis and timely recovery is not simply a case of Christmas coming early to this part of the world. It is actually the result of a lot of hard work, belt-tightening and the positive effects of prompt and targeted action over the past two years.

As a small and open economy, Hong Kong was feeling the full force of the economic storm this time last year. The weather was much more gloomy than what it is now. Our economy is now looking better but I don't think we are really out of the woods yet and we certainly would not take our finger off the pulse.

Since the onset of the global financial crisis, much has been said about challenges leading to new opportunities. Today we are seeing these words become reality.

Most economists agree that the global growth engines are indeed shifting away from traditional markets and towards Asia, and within Asia towards China. This has not happened overnight, or even over the course of a year or two. Instead, it has been a gradual process that is now gathering pace.

China, with the world's largest population and fastest economic growth of any large economy, is expected to lead our region and the world out of recession. Last month, the World Bank raised the Mainland's GDP forecast for this year to 8.4%, comfortably above our nation's target of 8%.

Not only is Hong Kong a major beneficiary of the Mainland's growth and its potential, but we are also a key contributor to it.

We are by far the single largest investor in the Mainland. And, since reunification with the Mainland in 1997 we have become ever more deeply integrated economically with our nation. But at the same time, we have remained the world's freest economy as rated by both the US-based Heritage Foundation and the Fraser Institute in Canada.

We have free flow of capital, information and ideas. We have our own fully convertible currency and a fiercely independent judiciary. Our civil service is efficient, clean and we don't tolerate corruption in any forms.

Since 1997 we have attracted about 240,000 talents and professionals to come and live in Hong Kong, and I can assure you there is plenty of space for more.

One of the opportunities to emerge from the financial crisis is for Hong Kong and our neighbours in the Pearl River Delta region, what we call PRD in short, to foster a much closer working relationship. I had the pleasure of leading delegations to the nine municipalities of the PRD earlier this year to promote greater co-operation.

I'm pleased that many of you will also have the chance this week to visit the PRD and see for yourselves the exciting prospects in the region. Many years ago I always called the PRD the best kept business secret in the world. I think this secret is getting out.

Through closer co-operation we will complement each other's strengths and maximise the potential of the entire PRD. We want to establish our region as one of the most competitive regions in the world by 2020.

This goal is not simply idle talk or a dream of us in Hong Kong. It was set out by the Central People's Government in January in a framework document for the development and reform of the PRD.

This document is important because it means that, for the first time, the economic integration between Hong Kong and the PRD is clearly laid down in our nation's policy agenda. It also adheres to the principle of 'One country, two systems' that guarantees Hong Kong a high degree of autonomy as a Special Administrative Region of China.

Our competitive edge as a global financial centre, and hub for trading and logistics will provide a firm foundation for the PRD's development.  Our world-class and highly developed services sector can promote high value-added services throughout the region and boost the development of service industries across the boundary.

China embarked on its economic reform policy 30 years ago. I am sure the leaders in Beijing are now scratching their heads and thinking: We have gleaned a lot of experience and success from the past 30 years, what are we going to do in the next phase of our economic reform?

I believe that the only way to go is learning from the experience of the past 30 years during which they have enhanced their agricultural industry, and also developed the industrial base in a very rapid pace. I believe they will have to speed up the reform policy for their service industries, as what they have done with the manufacturing industries 30 years ago.

Learning from that experience, Hong Kong was a perfect fit. We had everything they wanted. They had everything we wanted. They have natural resources and abundance of labour, space and everything in terms of resources. We have the "know-how expertise", financial capacities, marketing capacities.

Looking forward, if they want to develop the service industries, which I believe inevitably they will, because looking at Chinese economic development now, I envisage that it has to be in that direction that they are developing. And again we will be a perfect fit because we are 90% service-based and our service industries are truly world class.

We are gearing up for the exciting opportunities ahead through the expansion of our cross-boundary infrastructure including new control points, bridges and railways. Many of the projects are already under way or will soon to be under way.

To maintain our long-term competitiveness as the premier gateway to the Mainland of China we also need to get the soft infrastructure right.

I have mentioned our work in forging closer co-operation under the framework for the development of the PRD.

One of the main tools for stimulating cross-boundary business is our Closer Economic Partnership Arrangement with the Mainland, what we call CEPA. CEPA is a unique free trade pact that was launched in 2004 and has been expanded each year since then. It is an ongoing commitment to break down barriers to trade, services and investment between Hong Kong and the Mainland of China, especially in many industries within the PRD.

Perhaps the most significant point about CEPA for many of you is that the rules are nationality neutral. All local companies, and that includes foreign-owned firms incorporated in Hong Kong, can enjoy the full benefits of CEPA.

Under CEPA, most goods with the "made in Hong Kong" label are exempted from tariffs in the Mainland. Companies also enjoy greater access to markets across the country. Currently 42 services areas are covered under CEPA. These include legal services, banking, logistics, conventions and exhibitions, tourism services and other key sectors.

At the same time, a number of liberalisation measures are being implemented as pilot initiatives in Guangdong at an early stage, before being introduced throughout the nation. This will benefit the PRD and speed up the integration process.

Of course, we are not relying on cross-boundary integration alone for our long-term growth and prosperity. We have always been a diverse and vibrant business city in its own right with a community that demands high quality services and appreciates the latest fashions and trends. We have a low and simple tax system with salaries tax capped at 15%. Companies pay no more than 16.5% in profits tax.

We have abolished death duties. You can keep what you made. We know you have worked hard for it. We have no VAT, no GST, no capital gains tax, and we have recently reduced our wine duty to zero. Ever since we have abolished wine duty, we are now the world's No.2 largest auction centre for wine. Actually the whole idea is to create jobs in terms of sales, exhibitions, fairs, logistics, distributions and storage.

To broaden our city's economic base, we recently identified six industries with the potential to give added punch to our economy. These are in addition to our established strengths of financial services, trading and logistics, tourism and professional services.

These six industries are education services, testing and certification, medical services, environmental industries, innovation and technology, and cultural and creative industries. Each of them has already established a competitive edge in the region.

Promoting these industries does not mean picking winners. The Government is committed to the principle of 'Big market, small Government', and we are a firm believer that we should let the market decide whether a new idea takes off or fails. But we can clear away some of the obstacles to growth and give promising industries their best shot at success.

By encouraging cultural and creative industries to take off, we are also opening minds to new ideas and experiences that will help to shape our future.

Indeed, we want Hong Kong to be a creative and cultural capital for our region. That's why we are embarking on one of the most ambitious projects in the world today, which is called West Kowloon Cultural District project, or WKCD.

The WKCD is a 40-hectare site just across Victoria Harbour along the West Kowloon harbourfront. World-renowned architects are working on a master plan for the site which will include 15 arts venues including iconic designs.

This is part of our vision for a more inter-connected, creative and competitive Hong Kong.

I have touched on some of the exceptional opportunities for Hong Kong at a time of global rebalancing.

I also want to take this opportunity to talk about some topics beyond the offices and factories and meetings and boardrooms, some of the most important questions for business people such as yourselves. If you are contemplating coming to Hong Kong, you always think of questions that are much closer to your heart: Where will the children go to school? Will my family be safe and happy? What is there to do in the evenings? and how on earth can I work on my golf handicap?

The great thing about Hong Kong is that there is something for everyone. Our unique history has produced a rich cultural blend of East and West. We have a multi-cultural community and one of the lowest crime rates of any major city. English and Chinese are both official languages and many others are widely spoken here.

We have a vibrant international school sector with more than 50 international schools here. They offer curricula from around the world including North America, Europe and throughout Asia. And this year, five of our universities are ranked in the world's top 200 by the respected Times Higher Education World University Rankings.

We have one of the most efficient public transport systems in the world. Not only does this make it easy and very affordable to get around the city, it also helps to ease congestion on the roads. If you like to drive, very soon you will be able to buy an electric vehicle and zip around our city without leaving an even bigger footprint.

And because we are a small city, it is easy to escape to the countryside for a hike or a day at one of our many beaches. And, if you prefer to walk around our countryside, we have a lot of them as well. But if you like to swing a club and hit at that white little ball, we have golf courses around us as well.

Chief Secretary Henry Tang gave this address at the 10th Hong Kong Forum "Hong Kong's Business Significance at a Time of Global Rebalancing" at the Hong Kong Convention & Exhibition Centre.