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Following is the speech delivered by the Financial Secretary, Mr John C Tsang, at the Hong Kong General Chamber of Commerce Business Forum entitled "Seeing into 2012: Global Economic Swing to Asia" held at the Hong Kong Convention and Exhibition Centre today (December 13):
Distinguished guests, ladies and gentlemen,
Good morning.
I am delighted to join you all today.
I don't intend to inundate you with facts and figures. I shall leave that to the Economist later, but I would like to mention just one important number: that number is 150. Congratulations to the Hong Kong General Chamber of Commerce on its 150th anniversary, and thank you for inviting me to speak at this Business Forum today.
I would also like to thank the Chamber and its members for your always timely advice over the years, and especially recently during what has become the worst global financial crisis in a century.
On that note, as I said before, the Budget will be coming on February 1. So please keep those ideas coming. As in my previous Budgets, supporting our business community through volatile times will continue to be my top priority.
The theme of this Forum reminds me of an old saying that goes something like this: The only predictable thing about markets these days is their unpredictability.
In September, Madame Christine Lagarde of the International Monetary Fund described the current situation another way, saying that the global economy is entering, quote, "a dangerous new phase".
Either way, the relationship between government and business will continue to be scrutinised for some time to come. I am not just referring to Hong Kong. Recent events in the US and the Euro Zone have highlighted the complexity of this relationship. We have seen quantitative easing, company bailouts, strikes, social unrest and political changes in places that, not so long ago, were regarded as some of the most stable and prosperous places on earth. A bond fund manager at Pimco that I recently met in Los Angeles has described this state of affairs as being the "New Normal".
While the overall economic outlook is fairly uncertain, a global economic swing towards Asia, and for that matter, towards the emerging economies, is ongoing and even accelerating. Emerging markets in Asia and elsewhere, particularly Mainland China, have become increasingly prominent growth drivers for the global economy.
With plenty of leeway to fine-tune macro-economic policies and maintain growth, the Mainland can serve as the stabilising force for Asia, and perhaps the world.
As a small and externally oriented economy, Hong Kong has always strived to stay competitive and achieve sustainable growth while staying prepared for the rainy days. This is how we maintain the city's vibrancy to cope with increasingly pronounced global economic swings and cycles. Fortunately for us, Asia now accounts for more than 70 per cent of our merchandise exports. Growth over the past decade has been phenomenal, with the Mainland standing out clearly as the bright spot.
We will continue to strengthen trade and investment ties with emerging markets in Asia and beyond. This includes pursuing bilateral and multi-lateral trade, investment and taxation agreements to diversify our export markets.
I was visiting in South Africa just last week. The enthusiasm among the business community there for closer trade and investment links with Hong Kong was uplifting. Members of the business delegation that I led to South Africa, having made initial contacts with their counterparts in the country, have already identified a few new potential business opportunities there.
While in Pretoria, I had a fruitful discussion with the South African Finance Minister. We were not surprised to find that there is a striking similarity between Hong Kong and South Africa in that we both serve as the springboard to a vast hinterland. We agreed that there is much room for further promoting our trade relations as well as ties in many areas. As a first step, both sides will, as a matter of urgency, start work on an Avoidance of Double Taxation agreement.
I have seen the same level of excitement during previous visits to other members of the BRICS group of major emerging economies.
While continuing to seek new opportunities overseas, we have also been making much headway in further enhancing our integration with the Mainland. Broadening Hong Kong's economic ties with the Mainland remains a key objective of the Government. We shall strive to complement the National 12th Five-Year Plan and reinforce Hong Kong's strategic position as an international centre for financial services, trade and shipping.
We are also working with our counterparts in the Mainland on implementing CEPA, which already offers unparallelled access to Mainland markets and covers 44 service areas. The new Supplement VIII will be signed later today. It will be a further step towards our goal of full liberalisation of cross-boundary trade and investment by end-2015.
Another area of close cross-boundary collaboration is finance, and particularly Renminbi business. As China's global financial centre, Hong Kong is making the most of its international connectivity to open up new Renminbi business opportunities, not only for our financial institutions but for business in general.
Making the most of Hong Kong's "China advantage" and "global advantage" was a major theme of Vice-Premier Li Keqiang's visit to our city in August this year.
During Vice-Premier Li's visit, he announced a range of initiatives to expand the depth and breadth of Renminbi activities in Hong Kong. Some of these measures have already come into play.
Referring to the National Five-Year Plan, Vice-Premier Li said, and I quote, "It is in Hong Kong's interest and China's interest that Hong Kong continues to bring out the unique advantages it has developed over the years and play its irreplaceable role in the Mainland's reform, opening-up and modernisation drive." End quote.
We shall take full advantage of the opportunities provided by the National Five-Year Plan.
A seminar tomorrow (December 14) attended by senior officials from Beijing will discuss this very topic under the title "Implementation of the Central Government's Measures to Support the Financial Development of Hong Kong". I look forward to seeing many of you there.
Ladies and gentlemen, speaking at the APEC Summit in Hawaii last month, President Hu Jintao called on the business community to strengthen public-private partnership and jointly promote world economic growth and business co-operation.
President Hu also emphasised that government departments should better appreciate the role of the business community in promoting growth. He urged governments to listen to the views and suggestions of the business community and encourage its active participation in economic development and regional co-operation.
So, what can the Hong Kong Government do to help businesses cope with this "New Normal" of market volatility?
As an international financial centre, Hong Kong is able and we are prepared to deal with enormous flows of capital into and out of the city on a daily basis.
Maintaining financial and monetary stability is of utmost importance, especially amid the current unstable global recovery and prolonged liquidity glut.
The several rounds of countercyclical prudential measures rolled out by the Hong Kong Monetary Authority to forestall excessive credit growth, and a series of measures initiated by the Government to cool the property market, have helped safeguard macroeconomic and financial sector stability. We will continue with this overall strategy.
At the same time, we are exploring new export markets and nurturing six new industries to achieve their potential.
These are some of the ways we are reinforcing and re-engineering our economic base to withstand external shocks and expand into new growth areas.
Through closer partnership with the business community, the Government has identified and implemented initiatives to cut through red tape, remove outdated regulations, improve regulatory efficiency and reduce business compliance costs.
Ladies and gentlemen, not only has Hong Kong remained the freest economy in the world for the past 17 years, we have also moved to the top of the IMD's world competitiveness league table. Hong Kong is also ranked second by the World Bank for ease of doing business.
These are important indicators that our city is in step with our changing times and, I believe, better able than most other places to cope with market volatility.
The Government remains committed to the principle of "Market Leads, Government Facilitates", a keystone of our success to date. This goes beyond upholding our traditional values of the rule of law, clean government, low and simple taxes and free flows of capital, information and ideas.
The Government is also active in opening doors to new markets through bilateral accords and overseas promotions, often led by the TDC or Invest Hong Kong and supported by our Economic and Trade Offices around the world.
These are some of the ways that the Government and business can work together during these volatile times to cope with the "New Normal".
Hong Kong is facing a difficult year ahead as the world economy enters what Madame Lagarde described as "a dangerous new phase". It is important that the Government and the entire community should stick closely together in dealing with the many challenges that confront us in order to steer us through this impending storm.
I wish you all a successful Business Forum.
Thank you.
Ends/Tuesday, December 13, 2011
Issued at HKT 11:49
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