Speech by FS at Cato Institute Book Launch event in Washington, DC (English only) (with photo)
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Mr Monnery (author of "Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong", Mr Neil Monnery), Marian (Senior Policy Analyst of Center for Global Liberty and Prosperity, Cato Institute, Mr Marian Tupy), distinguished guests, ladies and gentlemen,
Good morning.
I am very pleased to join you today, to have this welcome opportunity to speak at the prestigious Cato Institute, and to help celebrate the launching of Neil Monnery's latest book, "Architect of Prosperity: Sir John Cowperthwaite and the Making of Hong Kong". My thanks to the Cato Institute and Marian for organising this meaningful event.
It's always a pleasure to talk about Hong Kong, especially with our good US friends. Indeed, Hong Kong's post-war rise from destitution to its universally recognised status as the world's freest economy is a fascinating story to tell.
In a nutshell, the building blocks for Hong Kong's enduring economic success include an open and free market; an efficient and clean public sector; a robust institutional framework; freedom of speech and travel; free movement of goods, capital and talent; a simple and low tax regime; a deep pool of multi-cultural and talented businessmen and professionals; and a fine tradition of rule of law, underpinned by an independent judiciary.
When Sir John became Financial Secretary in 1961, Hong Kong was already a free trading port with no controls on the movement of goods, capital and people. He noted that the economy was recovering quickly without significant government intervention. That confirmed his belief that the market was the most efficient way of allocating resources.
Sir John, during his decade-long steerage of Hong Kong's economy, adopted a "positive non-intervention" policy, ensuring minimal government interference in the economic affairs of individuals and society. With free market as his prime principle, he worked to maintain a prudent fiscal policy and a simple tax regime buttressed by low tax rates, providing the conditions that would enable individuals and businesses to thrive.
He did a fine job of that, according to Mr Monnery - and others over the years, including, of course, celebrated US economist Milton Friedman.
In his book, Mr Monnery offers a somewhat larger explanation for Hong Kong's post-war miracle - for delivering, and I quote, "one of the most dramatic improvements in living standards in the history of the world". The author writes - and again I quote: "there can be little doubt that the combination of Cowperthwaite's economic policy framework, and the entrepreneurship of the population, combined to deliver this."
Between the early 1960s and the mid-1990s, the Hong Kong economy soared, increasing 12-fold in real terms, with per capita GDP reaching a level qualifying Hong Kong as a high-income economy.
Hong Kong's economic progress did not stop there, I'm pleased to report. This year marks the 20th anniversary of Hong Kong's reunification with our motherland as a Special Administrative Region. Hong Kong has made considerable progress in this past 20 years, under the unique arrangement of "one country, two systems", which enables the indispensable building blocks of Hong Kong's continuous success and prosperity to continue.
In 2016, the Hong Kong economy nearly doubled that of 1997. Real GDP growth during this period averaged 3.2 per cent a year, exceeding that of the advanced economies which averaged about 2 per cent a year. Our per capita nominal GDP this year is expected to reach US$46,000, surpassing many of the world's advanced economies, including Germany, the UK and Japan.
Today, Hong Kong is among the world's leading financial centres and has been the world's largest IPO centre five times in the past 10 years. In addition, more than 8 000 overseas and Mainland companies have established offices in Hong Kong. We are Asia's second largest recipient of foreign direct investment.
These, and a great many other achievements, can be attributed to our unwavering commitment to free enterprise - to maintaining a free and open economic environment; to the free flow of capital, goods, information and talent; and to ensuring a level-playing field for all businesses.
Add to all that the rule of law and our belief in the value of small government, you will have an appreciation as to why last month, the Fraser Institute, with the involvement of our hosts, the Cato Institute, once again named Hong Kong the world's freest economy.
Hong Kong has earned that honour, by the way, every year since the first Economic Freedom of the World report was published, back in 1996.
They are hardly alone, to be sure. This year, Hong Kong was named the world's most competitive economy by the International Institute for Management Development in Switzerland - and for the second year in a row. And, year after year, the World Bank ranks Hong Kong among the five easiest places in the world to do business.
While Hong Kong's economy has fared well over the past decades, we cannot afford to be complacent and need to respond to changes in the external environment and our own demographics. Over the years, globalisation and technological advancements have intensified the competition between economies. Hong Kong has to stand up to keen overseas competition. At the same time, we have to tackle the challenges brought about by our fast ageing population.
Going forward, the Government will play a more facilitative role in furthering Hong Kong's economic development.
Our annual Policy Address - the first of the new-term Government, took place just two days ago. The Chief Executive, Mrs Carrie Lam, sets out our plans to tackle Hong Kong's supply-side constraints, to nurture the development of innovation and technology as well as the creative industry, and to further strengthen our pillar industries to drive our economy forward.
She also announced our plans to implement a tax cut mainly for smaller businesses and allow additional deduction for R&D expenditure. On top of an already low tax system, it will offer even more reason for US companies to look to Hong Kong when planning their expansion into the flourishing markets of Asia.
The Policy Address also outlines how Hong Kong will benefit from the closer economic ties with the Mainland of China, in particular, under the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Bay Area development.
But while we believe in the transformative role government can play in enabling sustainable and inclusive growth, we will, rest assured, remain true to our free-market roots.
We will keep our market open and competitive. And we welcome US companies, investment and talent to join us in building and sharing Hong Kong's economic prosperity throughout this 21st century of promise.
Finally, my congratulations again to Neil Monnery for your remarkable new book, and my gratitude to the Cato Institute for its warm welcome, its longstanding confidence in Hong Kong, and its outstanding contributions to the Economic Freedom of the World report. I welcome you all to come to Hong Kong to see for yourself the fruits of our strong commitment to upholding economic freedom over the years.
Thank you.
Ends/Saturday, October 14, 2017
Issued at HKT 2:10
Issued at HKT 2:10
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