An­other notch in Hong Kong’s belt

China Daily (Hong Kong) - - ROUND - By SO­PHIE HE in Hong Kong so­phiehe@chi­nadai­lyhk.com

Hong Kong has the po­ten­tial to play a big­ger role in the Belt and Road (B&R) Ini­tia­tive, ac­cord­ing to Qian­hai In­sti­tute for In­no­va­tive Re­search Pres­i­dent Ed­ward Chen Kwan-yiu.

One so­lu­tion is greater co­op­er­a­tion with Shen­zhen’s Qian­hai spe­cial eco­nomic zone, he told China Daily on the side­lines of a China Daily Asia Lead­er­ship Roundtable Lun­cheon on Wed­nes­day.

Chen said while the Hong Kong gov­ern­ment has put in a lot of em­pha­sis on its par­tic­i­pa­tion in the B&R Ini­tia­tive, the city is cer­tainly able to achieve more, es­pe­cially in the in­volve­ment of its bank­ing sec­tor.

“So far, there are very few big projects to our knowl­edge … the bank­ing sec­tor (of Hong Kong) seem to be rather re­luc­tant to par­tic­i­pate as the pay­out pe­riod is too long,” he said.

“Hong Kong banks, they don’t like pay­out pe­riod longer than 10 years, but the in­vest­ment pe­riod for most in­fra­struc­ture projects (of the B&R economies) are at least 20 years.”

Hong Kong should ide­ally be a fi­nanc­ing plat­form for in­fra­struc­ture projects, due to the city’s sta­tus as a global fi­nan­cial cen­ter, but then there seems to be a mis­match in terms of the struc­ture of pay­back pe­ri­ods.

While a pay­back pe­riod of 20 years may seem too long, it does not mean that Hong Kong can­not play an im­por­tant role through fi­nan­cial innovation, in­clud­ing se­cu­ri­tiz­ing long-term in­vest­ment and turn­ing the in­vest­ment into bonds or other fi­nan­cial in­stru­ments, Chen said.

The cen­tral gov­ern­ment has placed Shen­zhen’s Qian­hai as a spe­cial eco­nomic zone to ex­per­i­ment with new fi­nan­cial poli­cies, he said. This de­ci­sion was taken be­cause of Qian­hai’s prox­im­ity to Hong Kong, so that Qian­hai could learn from the fi­nan­cial ex­per­tise, ex­pe­ri­ence and in­sti­tu­tions of its neigh­bor.

He pointed out that Hong Kong and Qian­hai com­ple­ment each other, as Qian­hai en­joys fa­vor­able and in­no­va­tive poli­cies while Hong Kong pos­sesses tal­ent and ex­pe­ri­ence — by work­ing to­gether, the two will be able to form big­ger roles in the re­gion.

Chen said Qian­hai is very ea­ger to co­op­er­ate with Hong Kong, and that Hong Kong should set up large com­pa­nies in Qian­hai to take ad­van­tage of fa­vor­able poli­cies. Do­ing so would make it eas­ier for Hong Kong com­pa­nies to in­vest in projects in the B&R re­gion, par­tic­u­larly in terms of risk man­age­ment, he said.

“We can work to­gether with Qian­hai to in­tro­duce new fi­nan­cial prod­ucts and launch them on the Chi­nese main­land, for ex­am­ple, to raise funds,” he said.

As Hong Kong banks are not so keen to un­der­take longterm in­vest­ment, they should part­ner with Chi­nese main­land in­sti­tu­tions to in­tro­duce more new fi­nan­cial prod­ucts, se­cu­ri­ties and long-term loans to fund the in­fra­struc­ture projects, Chen said.

“I think some­how we have un­der­es­ti­mated the im­por­tance of Qian­hai in terms of our own fi­nan­cial devel­op­ment and our own role in the B&R Ini­tia­tive,” he said.

Ed­ward Chen Kwan-yiu, Qian­hai In­sti­tute for In­no­va­tive Re­search pres­i­dent, has pinned high hopes on co­op­er­a­tion be­tween the Hong Kong SAR and Shen­zhen’s Qian­hai free trade zone.

With ev­ery­thing set, the China Daily Asia Lead­er­ship Roundtable Lun­cheon awaits guests and vis­i­tors from gov­ern­ment de­part­ments and lead­ing play­ers from var­i­ous in­dus­tries.

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