Speech by CE at Boao Forum for Asia Financial Cooperation Conference opening
Following is the speech by the Chief Executive, Mr C Y Leung, at the Boao Forum for Asia Financial Cooperation Conference opening this morning (July 5):
Secretary-General Zhou (Secretary-General of the Boao Forum for Asia, Mr Zhou Wenzhong), Norman (Chief Executive of the Hong Kong Monetary Authority, Mr Norman Chan), distinguished guests, ladies and gentlemen,
Good morning. It is a pleasure to be here with you today to take part in the Financial Cooperation Conference of the annual Boao Forum for Asia.
In this year's 2016 World Competitiveness Yearbook, Hong Kong was placed first among 61 economies by Switzerland's International Institute for Management Development. Not only did we top rankings in government and business efficiency, we were also ranked first in terms of finance efficiency. The report gave high regard to our banking and financial services, stock market, regulations and management of financial risks.
Indeed, Hong Kong has always taken pride in the soundness, and fineness, of our financial system. Despite global economic uncertainties - exacerbated by Britain's exit from the European Union - our financial system has remained sturdy and resilient. We have sufficient liquidity in the system, our financial institutions have passed their stress tests, and our financial regulators have put in place prudent risk management measures. I have every confidence that the Hong Kong financial sector will stay strong and robust, and that our businesses, investors and professionals will turn the challenges into opportunities.
The role of finance in stimulating growth in the real economy - the theme of today's conference - is something we have long believed in, and well practiced here in Hong Kong.
Finance works for us in many ways and on many levels. That includes fundraising. Last year, we topped the world in raising funds through initial public offerings. In doing so, we supported expansion of a wide range of companies, from Hong Kong, the Mainland of China, Asia and around the world.
Hong Kong is also a leading fund management centre. Some 70 per cent of the assets under management here are sourced from Mainland Chinese and overseas investors. They place their assets here in Hong Kong because they place their faith here in Hong Kong.
Hong Kong is a hub for foreign exchange transactions as well - in Renminbi, in US dollars and many other currencies - enabling investors and companies to complete their cross-border investment and trade transactions.
In that, and more, is the real economy we have in mind.
The role that Hong Kong plays in using finance to stimulate growth in the real economies of our partners is a "super-connector" role. We are the "super-connector" between the Mainland of China and the rest of world. We enjoy, and share with our business partners, the advantages of both "one country" and "two systems". We are part of China and offer the China advantage. At the same time, we practice "the other system" and therefore offer the "two systems" advantage. It is hardly surprising that we are both the world's China financial capital and, at the same time, China's international financial centre.
We earned this position by working for decades with the Mainland of China. Hong Kong has the richest China experience, and the broadest connections. We also helped, since the very early days in the late 1970s, the country's market reforms.
Hong Kong's strength in finance is exemplary of our "super-connector" role - and that role is expanding. We stand to play a key role in China's Belt and Road Initiative. This project is far-reaching - it covers more than 60 economies, two-thirds of the world's population, and spans Asia, Europe and Africa.
The aim of the Initiative is to drive policy co-ordination, infrastructure connectivity, trade and investment, financial integration and people-to-people bonds in the Belt and Road regions. In each of these areas, Hong Kong sees huge opportunities - in finance, in particular.
The countries along the Belt and Road are, of course, at varying stages of development. Their savings-investment balance is equally diverse. Economies with considerable savings are looking for outlets for their funds, while other economies seek foreign investment to kick-start growth-driving projects.
We expect that Belt and Road economies will open up their capital accounts and financial systems, working together to promote a freer flow of capital. In such a way, savings can secure decent returns in the long run. They can be directed to gainful deployment in economies and projects with good potential.
Indeed, foreign direct investment is an important source of external finance. It also brings production capacity, new technology, management know-how, and connectivity to international marketing networks.
Hong Kong plays a prominent role as a conduit of foreign direct investment. The value of direct investment made from Hong Kong to the Mainland of China and overseas markets is almost five times our annual GDP - a good indication of our investment-friendly environment.
Finance can also help stimulate growth through infrastructure financing - one of the central goals of the Belt and Road Initiative.
Infrastructure development across Belt and Road economies varies greatly, to be sure. PricewaterhouseCoopers forecasts that, by 2025, the required infrastructure investment in emerging Asia and Central and Eastern Europe could rise to some US$5 trillion a year. In this, the financial sector has a huge role to play.
That is why the Hong Kong Monetary Authority's Infrastructure Financing Facilitation Office was created - as Norman will share more with you. Opened just yesterday, the Office will strengthen Hong Kong's role in bringing investors, banks and the financial sector together to drive infrastructure projects in countries along the Belt and Road.
Finance can also support the real economy through cross-border trade settlement. A stronger, more open system of international trade and payments is critical to economic growth. As China becomes the world's largest trading nation and the Renminbi a more popular currency, the use of the Renminbi in settling cross-border trade is burgeoning. Today, one-fifth of the Mainland of China's merchandise trade is billed and completed in Renminbi payment - an impressive growth given the Renminbi's cross-border trade settlement began only seven years ago.
The International Monetary Fund's decision to include the Renminbi in its Special Drawing Rights currency basket was an important milestone. It surely expands the Renminbi's acceptance as both a trading and an investment currency.
Hong Kong, I am happy to note, has contributed much to the Renminbi's internationalisation. We have been enhancing market infrastructure, consolidating financial platforms and expanding our contacts with Mainland authorities to spur the circulation of Renminbi funds between onshore and offshore markets. Our Renminbi Real Time Gross Settlement system operates over 20 hours a day. That gives financial institutions in European and American time zones an extended window for settling offshore Renminbi payments via Hong Kong.
Indeed, Hong Kong manages a lion's share of trade settlement in the Renminbi. Last year, the value of such transactions handled by banks in Hong Kong was close to RMB7 trillion. Hong Kong will continue to work with Mainland and overseas counterparts to boost our role as the world's offshore Renminbi trading hub.
In that, we have the Central Authorities' full support - as Mr Zhang Dejiang, Chairman of the Standing Committee of the National People's Congress, said at the inaugural Belt and Road Summit here in Hong Kong a couple of months ago.
Ladies and gentlemen, Hong Kong's experience as an international financial centre amply demonstrates that collaboration is essential to building a global financial system - one that stimulates the real economy, and one that creates wealth for the people.
Today's impressive line-up of speakers will be sharing their insights on monetary policy, capital flow and infrastructure investment. In that, I am sure we will hear much of promise, and prospects, for promoting growth and energising the global economy.
My thanks to Boao Forum for Asia, and to the Hong Kong Monetary Authority, for this welcome opportunity to talk to you. I wish you all a rewarding conference.
Thank you very much.
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