Speech by CS at "Hong Kong: Asia's Premier Business Hub" business luncheon in San Francisco
Following is the speech by the Chief Secretary for Administration, Mrs Carrie Lam, at "Hong Kong: Asia's Premier Business Hub" business luncheon in San Francisco today (June 3, San Francisco time):
Ruth Ma (Chairwoman of Hong Kong Association of Northern California), distinguished guests, ladies and gentlemen,
I arrived late yesterday afternoon from Hong Kong. San Francisco, I'm very pleased to say, is my first stop in a nine-day jam-packed visit to the United States of America.
It's certainly been an eventful beginning since my arrival: dinner last night with members of the Committee of 100, an association of Chinese-American leaders keen to hear the latest on business and politics in Hong Kong.
This morning, I toured the newly re-opened San Francisco Museum of Modern Art (SFMoMA) and enjoyed a very lively exchange with its Director, Neal Benezra. I will tell you in a moment why this conversation with SFMoMA is important and relevant to me.
And before joining you here, I paid a courtesy call on San Francisco Mayor Ed Lee, a regular visitor to Hong Kong together with his Hong Kong-born wife. Again, there was no shortage of topics to turn to. Our two cities, after all, have much in common, from technology, housing and cultural matters, to our shared delight in seafood and dim sum. Many Chinese Americans in San Francisco are actually decedents of Chinese migrants including those from Hong Kong.
A long way of saying that Hong Kong and San Francisco - Hong Kong and the United States - have strong ties on various fronts, and have a great deal to learn from and offer each other. On this trip in particular, I want to update my American friends on Hong Kong's new impetus for economic growth and our passion to enrich our city's cultural life.
There are, hence, very good reasons for me to start my day with a visit to your Museum of Modern Art in San Francisco. In Hong Kong, we are moving apace on our West Kowloon Cultural District (WKCD) project, which will rise as one of the world's largest art and cultural developments. In addition to being the Chief Secretary for Administration, I have been leading the statutory authority to oversee the WKCD project, which will comprise a park, a wide range of performing arts venues and a museum on contemporary art called M+, designed by the world renowned Swiss architects - Herzog & de Meuron. With opening scheduled for 2019, I am naturally interested in exploring collaboration with similar museums around the world. And that is why I have with me, on this trip to San Francisco, Mr Duncan Pescod, the Chief Executive Officer of the West Kowloon Cultural District Authority (WKCDA) who will follow on any possibility that we have discussed.
And we are not just building hardware - Hong Kong is set to become a hub for arts and culture in the region. We are among the world's largest art auction markets, along with New York and London. We are the regional hub for major art fairs and exhibitions, such as Art Basel Hong Kong, Art Central and our home-grown Fine Art Asia. Both the WKCDA and the Hong Kong SAR Government are putting in more attention and more resources to do audience building, arts education in schools, nurturing of talents, etc.
May I now turn to the strong business ties between us. The United States is Hong Kong's second-largest trading partner. Hong Kong is America's ninth-largest export market. Last year, Hong Kong bought US$37 billion worth of goods made in America. In 2015, Hong Kong was the United States' seventh largest market for agricultural products, fifth largest market for beef and veal exports.
Since we are in California, there are two other products that immediately come to mind - oranges and wine. It comes as no surprise that Sunkist has long been the alternative name we have in Hong Kong for oranges.
As for wine, since we removed all wine duties in 2008, the total value of our wine imports has almost tripled, to around HK$10.8 billion last year. Indeed, American wineries continue to make a significant presence in major wine fairs in Hong Kong, namely the Vinexpo, the Hong Kong International Wine & Spirits Fair and the Wine & Dine Festival. I wish I can visit your wineries in Napa Valley, but not on this trip, perhaps in my next holiday and have a taste of your great wines!
In fact, there is strong American presence in Hong Kong. According to the US Consulate General in Hong Kong, some 90 000 US citizens are living in Hong Kong. Nearly 1 400 US companies work out of Hong Kong. And the American Chamber of Commerce in Hong Kong, with some 1 700 members, is the largest international chamber in the city and one of the largest American chambers outside the US.
We are also a magnet of foreign capital. Hong Kong was the world's second-largest recipient of foreign direct investment in 2014. The US, at the end of 2014, ranked sixth among the top sources of investment into Hong Kong, with a stock of nearly US$50 billion.
US citizens, US companies and products, US capital: all alive and thriving in Hong Kong. For good reasons.
Consider, for example, that of the nearly 1 400 US companies in Hong Kong, more than half, around 800 to be exact, are regional headquarters or regional offices. It's pretty much the same with the rest of the almost 8 000 overseas and Mainland companies that keep offices in Hong Kong.
And here I want to give you a quote. It reads like this - "Hong Kong's strong traditions of rule of law, low levels of corruption, and high levels of public safety make it a preferred choice for American businesses in the region." This very strong statement of support and endorsement does not come from me. It came from the Hong Kong Policy Report 2015 submitted by the US Department of State to the US Congress.
That preference for Hong Kong as the base of American businesses for overseeing regional operations in Asia speaks, loud and clear, and in many languages, of the confidence US companies and global business have in Hong Kong's enduring advantages.
I'm here today to elaborate on a few of those "enduring advantages".
For business, they begin with confidence. Trust that Hong Kong rolls out a level playing field for all companies, whether yours is based in San Francisco or in Suzhou.
And we make it easy for you to do business. We believe, passionately, in free enterprise, in the right to make money - and keep most of it. We have a simple and low tax regime. For the past 22 years in a row, Hong Kong has finished first in the Index of Economic Freedom, published annually by the Heritage Foundation and the Wall Street Journal. Indeed, as a result of these strengths, Hong Kong has just regained her position as the world's No. 1 in terms of economic competitiveness as evaluated by the Swiss-based International Institute for Management Development in its World Competitiveness Yearbook 2016.
Our judiciary is independent, grounded in the rule of law, and our intellectual property protection regime reassures companies from around the world.
The language on the streets of Hong Kong, and in our offices, is English as well as Chinese, not to mention more than a few dozen other languages. We are, after all, a global city where East meets West.
We live in a global world; we trade and pursue opportunities in the global economy. As the global economy slows down, Hong Kong is no exception, and the slower economic growth in the Mainland of China may trouble some of you. However, one must not forget the fact that China is already the second-largest economy in the world after the US, and the growth target of 6.5 per cent is already the envy of many major economies.
More importantly, our country has mapped out a clear vision for global growth: that is the Belt and Road Initiative, which is perhaps the 21st century's most ambitious multilateral undertaking.
More than 60 countries are covered by the Belt and Road. Together, they account for 30 per cent of the world's GDP, more than one-third of its international trade, and over 60 per cent of its population. The Belt and Road Initiative's central goal is to build connectivity among the countries that take part. Infrastructure, large and small.
Those physical connections will then enable other ties: in business and trade, in government and culture, in people-to-people bonds.
China endorses Hong Kong's involvement in the Belt and Road Initiative. Indeed, just over two weeks ago, at the inaugural Belt and Road Summit in Hong Kong organised by the HKSAR Government with the support of the Ministry of Foreign Affairs, the National Development and Reform Commission and the Ministry of Commerce of China, as well as the People's Bank of China, Zhang Dejiang, Chairman of the Standing Committee of the National People's Congress, told the international and local audience, and I quote: "The Central Government has made it a major policy to support Hong Kong's participation in the Belt and Road development."
Specifically, Chairman Zhang said the Central Government will support Hong Kong in playing an active role in four aspects, namely (i) to build a platform of comprehensive services, such as accounting, design, consultancy, legal and arbitration, high added-value shipping, R&D and other professional services; (ii) to facilitate capital flows and promote Renminbi internationalisation and the development of the Belt and Road investment and financing platform; (iii) to promote cultural exchanges for greater mutual understanding among the people along the Belt and Road; and (iv) to deepen co-operation with the Mainland of China and jointly develop markets along the Belt and Road.
The Central Government believes that Hong Kong, with our unique advantages, will be able to make important contribution to this endeavour. We, of course, look forward to playing our part in the plan. Indeed, we believe Hong Kong has what the Belt and Road needs to find the fast lane to the future.
Starting with money. One of the world's major financial centres, Hong Kong is also China's international financial centre. We have the capital markets and the financial products, as well as the professional services expertise, to support the Asian Infrastructure Investment Bank (AIIB). That, of course, is the key financial institution backing the Belt and Road Initiative. And we are now in discussions with the AIIB on Hong Kong's role in it.
AIIB President Jin Liqun has said that Asia will need about US$730 billion a year to cover infrastructure construction between 2015 and 2020. That need, he added, cannot be met by existing multilaterals. In short, the private sector will play a considerable role in raising funds for the Belt and Road projects.
For that, they can look to Hong Kong, to our capital markets and our world-class financial professionals.
In 2015, the Hong Kong stock market was the world's eighth-largest in market capitalisation and first, overall, in equity funds raised through initial public offerings.
Bond issuance is another powerful fund-raising channel. Hong Kong's offshore Renminbi bond market - we call them "dim sum" bonds - is the largest of its kind outside the Mainland. Bolstering those bonds is Hong Kong's RMB900 billion liquidity pool, which is the biggest outside the Mainland.
The Hong Kong Monetary Authority is setting up an office to centralise the Belt and Road efforts of investors, banks and the financial sector in general. Our central goal is to boost Hong Kong's role as a financial intermediary, to offer wide-ranging financial services for Belt and Road projects, whether in infrastructure, business, trade, culture or any other promising opportunities across the three continents tied together by the Belt and Road Initiative.
Hong Kong has long served as an international intermediary, bringing people and businesses from the Mainland and the rest of the world together. Doing much the same for the Belt and Road, and its projects and programmes, will be a slam-dunk.
Of course, we also welcome US companies to take advantage of Hong Kong's strengths as a capital formation centre. To raise funds in Hong Kong for your projects, whether in the US, along the Belt and Road or anywhere else in the world.
That includes, by the way, raising Renminbi rather than dollars. It makes good sense, after all. Later this year, the Renminbi will be added to the International Monetary Fund's special drawing rights basket, alongside the US dollar, the Euro, the yen and the pound. That will surely expand the Renminbi's global reach and use.
Another advantage of Hong Kong is of course our international connectivity. The Hong Kong International Airport, flying high since 1998, has been the world's busiest cargo airport for the past six years. It's also the eighth-busiest passenger airport in the world, connecting Hong Kong to about 190 destinations. That includes 50 Mainland cities.
While it makes Hong Kong an Asia-Pacific aviation hub today, it has nearly reached its full capacity just 18 years since commissioning. Which is why we're developing a three-runway system for the airport. Completion is expected in eight years - and the charging of an airport construction fee to finance the third runway system involving reclamation of some 650 hectares of land will soon start.
Technology has long been a strong point for Hong Kong. Certainly when you include our enthusiastic embrace of all things tech and mobile. Indeed, the latest GfK Connected Consumer Index, out in April, once again rated Hong Kong tops among 78 countries and eight world regions, including North America. Our post-secondary institutions and R&D facilities boast world-class technological talent. Hong Kong universities today count 326 exchange agreements and close to 1 000 research collaborations with US institutions.
With the establishment, last November, of our Innovation and Technology Bureau, we've given our R&D talent, and entrepreneurial spirit, a central source for connections and direction - a guiding laser-light - across the I&T spectrum.
Governmental I&T policies and programmes are being rolled out by my new colleague, the Secretary for Innovation and Technology, one by one, together with an initial financial commitment of some US$2.3 billion. Our I&T agenda is ambitious, embracing robotics, e-commerce, the Internet of Things, the smart city and more. And government facilitation is serious.
While there is much we can do, we can't do it all alone. So I would invite you to look to Hong Kong, to the fast-moving markets of Asia and Mainland China, in considering your next start-up base or office expansion. You'll find good company there. Some 45 US tech companies work out of the Hong Kong Science Park, and in research areas ranging from electric vehicles to biotechnology and software development.
I am also pleased to note that our three Economic and Trade Offices here in the United States - in San Francisco, Washington DC, and New York City - have just instituted a pilot "Internship in the United States for University Students of Hong Kong". The summer programme will offer some 20 placements – in our ETO offices, as well as at interested US companies.
Hong Kong believes in education. Indeed, more than one-fifth of the Hong Kong SAR Government's total recurrent expenditure goes to education. That's more than any other single policy area.
Still, given Hong Kong's ageing population, we will need to count on attracting talented individuals from all over the world, if we are to maintain our success in the global economy.
We're working on that. Among other things, we instituted the Admission Scheme for the Second Generation of Chinese Hong Kong Permanent Residents. The year-old programme was created to attract the children of Chinese Hong Kong permanent residents who have emigrated overseas.
The plan is working, I'm pleased to note, drawing applicants from all over the world, especially the US. As of February, about 50 US-born individuals have taken advantage of the Second Generation scheme.
They can look forward to good jobs and a promising future. They can count, too, on world-class entertainment offerings. Iron Man will soon rise over Hong Kong Disneyland. And I know they will embrace Hong Kong's dazzling East-West culture and a restaurant and night-life scene to rival that of San Francisco.
Like much of the rest of the world, they will also find a community that doesn't always find common ground. That may harbour disparate visions of the future. Conflicting views on politics and the way forward.
In Hong Kong, as in the US, we may not always agree, and our disagreements occasionally make prime-time news. But Hong Kong is a pluralistic and open society, and there is room for civil disagreement. Time for pragmatic political evolution.
In short, ladies and gentlemen, count me among the optimists of the world. I see continuing prosperity for Hong Kong, a city I love. And in our long, strong, and growing, friendship with the United States of America, I can see a rewarding future.
Thank you very much.
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