It is a refreshing change to have an opportunity to talk about human capital, rather than financial capital, which has been taking up a lot of our time and energy in the past year or so.

Fortunately, the cities that are the focus of this symposium - London, New York and Hong Kong - all have a healthy supply of human capital. London, with its long history and cultural vibrancy, is, of course, a pre-eminent world city; New York, on the other hand, is - as the song goes - so good that they named it twice; and Hong Kong, by comparison, is the new kid on the block.

The recent financial crisis has highlighted the vulnerability of our economies in this era of globalisation. It has also reaffirmed the need to nurture talent to cope with the challenges of a more inter-connected world. The best way to achieve this is by embracing the spirit of co-operation between cities and nations that has proved critical in overcoming the economic difficulties.

Today, I am going to talk about the lessons that Hong Kong can bring to a global classroom, and how we can strengthen collaboration with London and New York to provide effective education tailored to the rapidly changing times.

This includes forging stronger international connections between schools and governments; fine-tuning our education system; and promoting education services as an engine of growth in driving our economy.

First, a quick recap of what we have been doing in recent years to bring our education system in line with our expectations for the future.

This year, after many years of hard work, we introduced a new 3-3-4 academic structure. This provides three years of junior secondary and three years of senior secondary education followed by a four-year undergraduate programme. This gives students an additional year at undergraduate level with greater emphasis on promoting critical thinking and problem solving skills.

Also in September, we introduced small class teaching in Primary Schools. This cuts the average number of students in a class to 25, compared to the previous 30 to 35 students. We are also reducing exam pressure on students and providing more opportunities for international exposure.

Among the things that world cities have in common is an ability to adapt to global trends in business, lifestyles and finance as well as in the classroom.

For one thing, we want more overseas students to come to Hong Kong. We know that people often follow opportunities, and I am confident that Hong Kong is in the right place at the right time to offer exciting opportunities to students.

With the growing prominence of the Mainland of China, our city is an ideal location for overseas students to become immersed in Chinese culture, study the language, learn the ropes in this part of the world, and - when the time comes - take the plunge into a career.

Hong Kong is a safe, stable and multicultural society. English as well as Chinese are official languages, and we have many of the home comforts that students are accustomed to in countries in the West.

From familiar restaurants, shops and leisure pursuits to arts and cultural activities, Hong Kong's blend of East and West offers something for everyone. At the same time, modern and inexpensive telecommunications systems keep them well connected to friends and family at home.

Not only do open information channels give overseas students and their families peace of mind, they also promote the free flow of ideas, information and creative thinking in our community.

Given the rapid growth of our city and our nation, our melting pot of different cultures, wide-ranging personal freedoms and high-quality lifestyle, we are confident that Hong Kong can and will develop as an education hub in Asia.

In fact, we recently identified education services as one of six industries with good potential to lead our economic recovery and long-term development. The need to broaden our economic base in the wake of the global recession was highlighted by our Chief Executive in his Policy Address in October.

As well as education services, we aim to clear away obstacles for other knowledge-based industries to take off. These industries are medical services, innovation and technology, testing and certification services, environmental industries and creative and cultural industries.

In terms of educational services, we have a vibrant international school sector with more than 50 schools providing curricula from around the world, including North America, Europe and throughout Asia. These schools are not exclusively for overseas students. They are also popular with local parents who want to give their children the opportunity of an international education in Hong Kong.

To meet growing demand, we recently allocated four greenfield sites for the development of the international school sector. The prestigious British school, Harrow, is one of the schools to have been granted a licence to build and operate new facilities. Harrow International School will be our first international boarding school, opening up a new dimension for our education sector.

As well as its distinguished reputation, Harrow has valuable experience in Asia through its established schools in Bangkok and Beijing. We look forward to bringing this expertise in education to Hong Kong and to attracting more non-local students to the city.

We have world-class universities, including our hosts for this forum. Not only is the University of Hong Kong our oldest university, it is also our highest-ranking school in the respected Times Higher Education World University Rankings. This year, HKU ranked 24th in the world while four other local universities also made it into the top 200.

We also have the world's top ranked business school. The Kellogg-HKUST Executive MBA Programme was rated number one by the Financial Times of London this year. The Wall Street Journal also ranked it number one last year.

The programme is jointly offered by the Hong Kong University of Science & Technology and Northwestern University in Chicago. Key factors for its high ranking are the number of international students and the career paths of alumni.

In fact, many of our institutions have twinning arrangements with overseas partners in offering programmes. Currently, there are over 1,200 non-local programmes catering for over 40,000 students in Hong Kong.

Last year, we increased the quota for international students so that more people can come to Hong Kong and benefit from our unique learning environment. At the same time, these students contribute to our education sector by bringing their own talent and cultural flair to our city.

We have also relaxed the restrictions on overseas university students. Under the new rules, they may remain in Hong Kong for up to a year without restriction after their studies. This gives them plenty of time to find a suitable job in Hong Kong and launch their careers here - which will also add to the breadth and depth of our human capital.

In the last school year, there were about 9,200 non-local students in Hong Kong. That is a 50% increase over the past four years, and 16% more than last year.

At the same time, about 3,000 of our students are involved in exchange activities, and we estimate that some 26,000 are studying in the US and UK, with another 20,000 in Canada and Australia.

The question now is how to build on this momentum.

Earlier I mentioned our determination to promote educational services as a more powerful economic force.

As well as the 12 Government-funded institutions, we are promoting the self-financing higher-education sector. Today, some 9,000 students are enrolled at three self-financing degree-awarding institutions. We have reserved two additional sites for the expansion of this sector which will provide about 4,000 more places.

We have also launched a programme to revitalise old industrial buildings, some of which may be ideally suited for operators of self-financing courses.

Today's world cities are multicultural, pluralistic places where opportunities await all - regardless of race, creed or colour. That does not necessarily mean it is easy. Indeed, competition for university places and jobs is fiercer than ever.

In Hong Kong, we like to reward hard work and enterprise through low taxes and high quality of city living.

We have all the fixtures and fittings you would expect from a world city, including a free flow of information, unfettered media, fully convertible currency, the rule of law and a zero tolerance approach towards corruption.

Last month, Barack Obama made his first visit to China as US President. He talked about the growing number of students from China and the US studying in each other's country. Addressing students in Shanghai, President Obama said, "These exchanges mark a clear commitment to build ties between our people, as surely as you will help determine the destiny of the 21st century."

I share President Obama's confidence in our next generation, and his belief that building strong ties among young people from different countries and cultures will help set a positive course for the future. And I believe that London, New York and, of course, Hong Kong will be at the forefront of these exchanges that will nurture global citizens for the global village.

Financial Secretary John Tsang gave this address at the luncheon of the "Managing Human Capital in World Cities" forum at the University of Hong Kong.