CE's speech at "Hong Kong: China's Global Financial Centre" Conference in Edinburgh(1)
Hong Kong (HKSAR) - Following is the speech by the Chief Executive, Mr Donald Tsang, at "Hong Kong: China's Global Financial Centre" Conference in Edinburgh today (September 15, Edinburgh time):
Mr Swinney, distinguished guests, ladies and gentlemen,
Good morning. I'm delighted to be here in Edinburgh. My only slight regret is that we couldn't hold this conference earlier to take advantage of the very best cultural entertainment at the Edinburgh Festival.
As the French writer Voltaire once said: "We look to Scotland for all our ideas of civilisation."
As you probably know, Voltaire was referring to the period of "Scottish Enlightenment" in the 18th Century that helped shape European society.
Given Hong Kong's long and deep connections to Scotland, we have also benefited from many great Scottish ideas.
A Scotsman, Thomas Sutherland, provided the inspiration for establishing a bank called the Hong Kong and Shanghai Banking Corporation (HSBC) back in 1865.
Nowadays, HSBC is a household name, while Hong Kong has firmly established itself as an international financial centre in the Asian time zone.
Today, I'd like to talk about Hong Kong's role in Asia's fast-moving financial markets and our ideas and aspirations for our city and our business partners, including those from Scotland.
I believe there is no better time than now to expand the already strong links between our two business communities.
Asia has emerged from the recent global financial crisis in relatively good shape.
Hong Kong has made a full recovery, recording GDP growth of 7 per cent last year. In the first half of this year, our economy expanded by 6.3 per cent.
Part of Asia's recovery has been home-grown, and reflects the region's rapid and comprehensive policy response to the financial tsunami.
In particular, we learned some very important lessons from the Asian financial crisis a decade earlier. As a result, across our region, fiscal positions have improved, monetary policies have been strengthened and corporate and bank balance sheets are healthier.
When the global financial tsunami hit, many governments in Asia were able to cut interest rates sharply and implement large fiscal stimulus packages without creating policy excesses.
We all benefited from Mainland China's resilience to the global financial crisis. The Mainland helped to cushion an export collapse with strong domestic demand, lifting credit constraints and implementing an exceptionally large fiscal stimulus. At the outbreak of this financial tsunami, all of Asia lost about 20 per cent of its trade with Europe and America.
But what of Hong Kong?
Similar to Edinburgh, Hong Kong is built upon a rock; in our case famously suggested by Lord Palmerston in the 1840s to be a "barren rock".
Fortunately for us, the past 170-plus years have been anything but barren.
Hong Kong has successfully evolved into an international business and financial centre. And we are not done yet.
Our unique and rapid development makes Hong Kong an interesting test case for the free economy philosophy.
The economist Milton Friedman long argued that economic freedom is a key to economic prosperity.Hong Kong's ranking as the world's freest economy by both the Heritage Foundation in the US and the Canada-based Fraser Institute for the past 17 years would seem to prove his point.
Friedman summed it up by saying, quote: "If you want to see capitalism in action, go to Hong Kong." I was rather amused in fact by the Guardian the day before yesterday.
They published a report on my appearances at various seminars in Londonreferring to me as a senior communist official from China. I was very fascinated because I have been known as a die-hard capitalist throughout the world, for what I've done and what I've said. And I haven't seen a communist wearing bow-tie either.
For that matter they are very gracious to make the correction today. But it's interesting how a capitalist can be misunderstood.
The foundations that underpin Hong Kong's economic freedom include: the rule of law; the free flows of capital, ideas and information; a low and simple tax regime with profits tax of 16.5 per cent and salaries tax capped at 15 per cent.No income tax, no VAT, no estate duties, no capital gains tax and even zero duty on wine in Hong Kong. We also work hard to maintain a highly transparent and effective regulatory environment.
Let me highlight three areas to illustrate Hong Kong's strengths as both a global financial centre and as China's most important city for international finance.
First, we are increasing our cross-boundary collaboration with our immediate neighbours in Guangdong Province, particularly in the Pearl River Delta, or the PRD.
This region is often called "the world's factory" because of its dynamic manufacturing base - which I hasten to add includes substantial Hong Kong investments.Eighty thousand Hong Kong factories operating there, employing over 10 million workers.Our closer links with the PRD are helping to open up new business opportunities and strengthen our financial ties with the Mainland.
Last year, we signed a Framework Agreement on Hong Kong/Guangdong Co-operation. This reflects a shared commitment to break down barriers to trade and investment and open up the flow of ideas and innovation throughout the PRD region.
The Agreement reaffirms Hong Kong's status as a global centre for finance, trade and logistics. By combining our city's strengths with those of our neighbour, we aim to establish the PRD as one of the most competitive regions in the world by 2020.
