HK’s financial-hub role critical as nation opens up
Zhou Bajun notes the SAR needs to transform itself into a global financial center to play its part in the country’s deepening reforms
This year marks the 40th anniversary of China’s reform and opening-up as well as the launch of the “two stage, three step” macro development strategy between now and mid-21st century, as announced at the 19th National Congress of the Communist Party of China.
President Xi Jinping’s key address at the opening of Boao Forum for Asia 2018 on April 10, and at the annual meeting celebrating the 30th anniversary of the establishment of Hainan province and Hainan Special Economic Zone on April 13 sounded the call for China to intensify its reform and opening-up programs and lay out a clear framework.
To fulfill such goals, at least two things must be done. Firstly create a pilot freetrade zone with vastly relaxed market access and foreign-investment restrictions, and implement fully but gradually pre-entry national treatment plus a negative list management system. Secondly: Further open the Chinese mainland’s financial market to foreign investment, with an international financial hub to be established in Shanghai by 2020 with the renminbi as the main transaction currency, and also develop a new global financial hub comparable to New York and London (or another financial hub of the European Union).
Despite United States President Donald Trump’s wanton unilateralism and protectionism and triggering of a USChina trade dispute by going back on his word, the Chinese government and people have overcome all obstacles with a strong will and determination. The nation has launched a series of initiatives to intensify its reform and opening-up programs at the time of the 40th anniversary of these original programs.
Noteworthy measures include: On June 12, the People’s Bank of China and the State Administration of Foreign Exchange announced the Notice on Issues Concerning the Management of Domestic Securities Investment by Renminbi Qualified Foreign Institutional Investors.
On June 14, at the 10th Lujiazui Forum with “Shanghai’s Development toward an International Financial Center in the New Era” as the theme, Li Qiang, a member of the Political Bureau of the Communist Party of China Central Committee and Shanghai’s Party chief, said Shanghai is running pilot plans to further open up its financial market in six areas. These concern industries including banking, bonds and insurance. Beneficiaries of such opening up are not restricted to developed countries such as the United Kingdom, France, Germany and Japan, but include developing countries like Jordan and Morocco, as well as China’s Hong Kong and Macao special administrative regions and Taiwan.
On June 15, Xinhua News Agency reported that the State Council had announced six ways to actively and effectively utilize foreign capital to promote high-quality economic development. The new policies measure up to advanced international levels. They will help foster a more transparent, fair, convenient and attractive investment environment. They will also help retain China’s status as one of the main destinations of foreign investment in the world and a steady growth in foreign investment. That will help foster quality economic development with an open market; the ultimate aim is a fully open market.
During the country’s 40 years of reform and opening-up, Hong Kong has played a unique and significant facilitating role. The SAR should and must continue to make special and important contribution as the country deepens its reform. What Hong Kong possesses is the ability to provide, on behalf of the country, a new global financial center in the 21st century. The current and future administrations of the SAR must make that their ultimate mission in their bid to promote the “one country, two systems” principle. It will also help our economic, political and social development.
In the first five years after returning to the motherland, Hong Kong was troubled by a serious economic recession triggered by the Asian financial crisis. From then on until the 20th return anniversary, Hong Kong’s main target was universal suffrage. But that led to not only stalling of constitutional development but also to an economic stalemate and worsening livelihood problems. From the 5th five-year onward Hong Kong must merge into the country’s overall development strategy. It must participate in the Guangdong-Hong Kong-Macao Greater Bay Area project and the Belt and Road Initiative. It must also move forward with the transformation of its economy to improve people’s living standards. All these require a new mission: This means strengthening Hong Kong’s best advantages — its financial industry — and transforming the SAR into a global financial hub.