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Following is the speech by the Secretary for Commerce and Economic Development, Mr Gregory So, at the Hong Kong Trade Development Council dinner in Tokyo today (May 15):
Distinguished guests, ladies and gentlemen,
Konbanwa (meaning "Good evening" in Japanese).
First of all, I would like to congratulate the Hong Kong Trade Development Council (HKTDC) for organising this dinner and thank you all for coming.
It is a great pleasure to be here in Tokyo and to enjoy the warm Japanese hospitality.
This event is part of the HKTDC's "Think Global, Think Hong Kong" promotion here in Japan. Your presence is also an indication of the huge potential for deeper and broader relations between our communities.
Of course, Japan and Hong Kong enjoy a long and strong friendship that has developed over many decades. The devastating earthquake and tsunami that struck eastern Japan just over a year ago brought our communities even closer together. The Hong Kong Government along with a number of our NGOs and other groups pitched in with the relief efforts in the aftermath of the disaster. We are very pleased to see that Japan is back on the road to full recovery.
Similarly, the Japanese community in Hong Kong has never lost its confidence in our city, even during times of economic upheaval or financial crisis.
That is the thing about Asia. Although we have our different cultures, languages, political structures and ways of life, we live in a deeply connected region. We depend on each other during difficult times. Also, our growth and prosperity is linked to our neighbours around the region.
Perhaps the best way to understand Hong Kong's role in our region is through our bilateral relationships with our neighbours.
Although Hong Kong has evolved differently from most of Asia, and grown up separately from the rest of our nation China, we have never become estranged from our friends in the region. We have always held true to the Asian values of respect, hard work and perseverance and the values of knowledge and education. These are at the core of our community.
Today, more than ever, our city's characteristics have a place in the development and opening up of Mainland China. In trade, education, finance and innovation, Hong Kong's international outlook and experience are helping to link China to the world and the world to China.
This year marks the 15th anniversary of the establishment of the Hong Kong Special Administrative Region of China. In this respect, Hong Kong is a relatively "young" city with a bright future.
When people think of Hong Kong they often think of our city's iconic skyline dotted with modern buildings and linked by efficient transport networks. The vibrant hustle and bustle of our city is matched by just a few other places on earth, Tokyo being one of them.
Hong Kong's success has been built on a combination of factors that have matured and been fine-tuned over time.
The Hong Kong Government has always seen the value of encouraging entrepreneurship through business-friendly policies. We have strived to maintain low taxes and high productivity levels. We have always seen a strong emphasis on progress through innovation and creativity.
Our common law legal system, level playing field for business and the free flow of news and information are traits that underpin Hong Kong's development.
Our city's links with the Mainland really started to take off after 1978 when the late leader Deng Xiaoping introduced policies that would transition the Mainland from a planned economy to a market-led economy.
In the '80s and '90s, our manufacturing operations relocated across the boundary into the Pearl River Delta region where they continue to thrive today. Hong Kong and international corporations also began to expand their business links in all Mainland provinces and major cities.
Over time the manufacturing base was replaced by a strong growth in professional and business services. Today, professional services and financial services are two of our four main economic pillars, alongside tourism and trade and logistics. In 2010, services accounted for around 93 per cent of Hong Kong's GDP (Gross Domestic Product).
The underlying positive force for change in recent years has been our successful reunification with the Mainland in 1997 under the principle of "One Country, Two Systems".
Over the past 15 years, government-to-government, business-to-business and people-to-people links have expanded considerably. As the Mainland continues to reform and open up its markets, Hong Kong is often used as a reliable testing ground for the nation's liberalisation efforts.
Barriers to cross-boundary trade have also been broken down progressively over the past decade. This process is accelerating and holds great promise for international businesses wanting to access the Mainland market, and for Mainland businesses venturing into the global market, all via Hong Kong.
One major collaborative initiative is the Mainland and Hong Kong Closer Economic Partnership Arrangement, or CEPA, which was implemented fully in January 2004.
This unique free trade pact is possible because, under "One Country, Two Systems", both the Mainland and Hong Kong are separate members of the World Trade Organisation and remain separate customs territories. It allows for tariff-free entry for qualified Hong Kong products to the Mainland and greater access for our services industries to markets throughout China.
CEPA has been expanded and enhanced each year since its implementation, highlighting our ongoing and deepening commitment to breaking down cross-boundary barriers to trade.
Our goal is to achieve complete liberalisation of trade in goods and services between Hong Kong and the Mainland by 2015.
While Hong Kong is becoming much more closely integrated with the Mainland, our economy remains autonomous and versatile, allowing us to adapt quickly to changes in the regional and international environment.
While Hong Kong felt the full impact of the recent global financial crisis, we managed to recover relatively quickly.
Once again - and this is a common theme for Hong Kong - opportunities have arisen from the challenges faced.
With large parts of Europe and the US in a prolonged economic downturn, China and much of Asia have been able to take up a lot of the slack.
The current focus is on the Mainland's financial liberalisation and, again, Hong Kong's advantages under "One Country, Two Systems" are firmly in play.
The internationalisation of the Renminbi is a national policy that is being spearheaded via Hong Kong. Importantly, our city has a completely free and open market, with no capital controls. We have a world-class regulatory and legal environment. We also have mature banking, stock and financial markets on par with New York, London and Tokyo.
Since the launch of offshore Renminbi banking in Hong Kong in 2004, we have gained important experience dealing with the Renminbi and the Mainland's evolving financial system. As such, our city has become the main testing ground for offshore Renminbi banking, bond issuance and trade settlement.
During a visit to Hong Kong in August last year, China's Vice-Premier Li Keqiang made specific mention of Hong Kong's "irreplaceable role" in China's reform, opening-up and modernisation drive. All of this has been made possible because we now belong to "One Country".
But our benefit and value to "One Country" comes from our different systems, including our different financial and legal systems which are protected by our constitutional document, the Basic Law.
To promote the cross-boundary use of Renminbi between Hong Kong and the Mainland, we have established extensive links with the Mainland's market through three bridges. These are trade settlement, direct investment and portfolio investment.
These links are crucial elements in the overall plan to develop Hong Kong as China's major offshore Renminbi centre. A series of measures were announced in Beijing last year that will help consolidate Hong Kong's role in this regard.
They include expanding the Renminbi trade settlement scheme to cover the whole of Mainland China. For the first time, companies and firms around the world - including here in Japan - can settle their Mainland trade in each and every Mainland province using Renminbi. Last year alone, Hong Kong banks handled RMB1.9 trillion in trade settlement transactions - or about 92 per cent of all global trade settlements in Renminbi.
Looking to the future, Hong Kong's inclusion in the 12th Five-Year Plan - our nation's economic roadmap up to 2015 - is a pivotal moment. It is the first time that Hong Kong, along with Macao, has been included as a separate chapter in a Five-Year Plan.
This separate chapter stresses the need to enhance Hong Kong's competitive advantages, including our position as an international financial, trade and shipping centre, and supports our development as an international asset management centre and an offshore Renminbi business centre.
Ladies and gentlemen, I believe we have a strong foundation on which to develop the triangular relationship that exists between Japan, Hong Kong and Mainland China. This relationship has been a focus of the Japan - Hong Kong Business Co-operation Committee that was established back in 1979. Since then, there have been numerous dialogues on ways to strengthen our bilateral and trilateral relations. Today, more than ever, this relationship is entering a new and exciting age.
Hong Kong is at the forefront of cross-boundary liberalisation efforts that are bringing down barriers to trade and investment with Mainland China. We have also established strong and positive bilateral relations with Japan, which is our city's third largest trading partner.
Your presence here this evening is a strong indication that we are all ready and willing to face future challenges and take full advantage of Asia's rise in the 21st century together.
Thank you very much.
Ends/Tuesday, May 15, 2012
Issued at HKT 20:40
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