CE's speech at "Hong Kong: China's Global Financial Centre" Conference in Edinburgh(2)
A number of major infrastructure projects are underway or planned to improve physical integration within the region.
These include: The Hong Kong-Zhuhai-Macao Bridge, which will span30 kilometres and provide quicker and easier access to the relatively undeveloped western shores of the Pearl River Delta.An express rail line that will plug Hong Kong into our nation's expansive high-speed rail network.A new boundary crossing to improve access between Hong Kong and the fast-growing Shenzhen city in PRD.
These large scale projects will open up new opportunities and make it easier and more efficient to move people and goods around the region, and together with it, the movement of funds as well.The region measures about 180,000 square kilometres, more than double the size of Scotland.It has a population of more than 100 million - about 20 times the population of Scotland, or more than one and a half times the size of the UK.
The second area that highlights Hong Kong closer financial integration is our role in the liberalisation of the Mainland currency, the Renminbi.
At a time when markets in Europe and the US remain volatile, Asia, and in particular China, have been relatively resilient to the economic downturn.
Economists are debating when the Mainland currency, the Renminbi, will become an international currency.
It will eventually, but it will take time. As China's global financial centre, the internationalisation of the Renminbi is a vitally important area for Hong Kong.
Meanwhile, under "One Country, Two Systems", Hong Kong will be the main testing ground for the wider international use of the Renminbi.
We bring to the table what no other city in China has - a freely convertible currency and have free flows of capital and information. Our financial system is highly transparent and is driven by international best practice.
And we have the highly developed multi-currency, real-time gross settlement system needed to handle massive volumes of currency transactions.
Renminbi banking in Hong Kong has been gathering momentum since its launch in 2004.Today, some 128 authorised institutions engaged in Renminbi business including deposits, remittances, credit cards and checking accounts.Total Renminbi deposits in Hong Kong at the end of July topped 572 billion Renminbi, or about 55 billion Pounds.
A more recent development has been the introduction of the Renminbi trade settlement scheme. Businesses around the world are now able to settle trade using Renminbi with companies in the whole of China.
In the first seven months of this year, Renminbi trade settlement through Hong Kong's banking system reached 953 billion Renminbi, or almost 93 billion Pounds. I'm sure that by the end of this year, this will reach about 1.5 trillion Renminbi, and that would mean about 150 billion Pounds.
In fact, trade through Hong Kong accounted for more than 80 per cent of the total cross-border trade settlement in Renminbi.
Our deep pool of local and international financial talent, and large cluster of international banks, makes Hong Kong an ideal conduit for the wider use of Renminbi outside the Mainland.
This brings me to my third point. How Hong Kong can use its special status as China's offshore Renminbi centre to play a greater role in the international financial community.
For one thing, we will continue to encourage more overseas companies to use Hong Kong as a centre for settling their Mainland trade in Renminbi, instead of using a third currency.
In fact, we are now talking seriously with London how we would be able to help them to become a financial centre in Renminbi in western Europe. And we certainly would be able to help on the settlement and clearing system.
Last year, Hong Kong became the first place outside the Mainland to have an interbank market for Renminbi.Also, businesses from anywhere in the world can now open an account in Hong Kong and freely exchange Renminbi.
All this activity is encouraging a greater range of financial products in the marketplace.
This is spurring Hong Kong's development as a capital-raising centre for overseas businesses.
Last year, fast-food giant McDonald's Corporation became the first non-financial overseas company to issue a Renminbi corporate bond in Hong Kong.This represented the start of a new funding channel for overseas companies looking to raise capital for their China operations. They may have difficulties in raising the same liquidity within the Mainland, but they would have this additional channel to do so through Hong Kong. Renminbi that raised can be then channeled back to the Mainland to help their operations on the Mainland.
In the first half of this year, 38 entities issued Renminbi-denominated bonds raising a combined total of 42.7 billion Renminbi or more than 4 billion Pounds.
We also see great potential for more overseas companies to list on the Hong Kong stock market.
For the past two years, Hong Kong has led the world in total funds raised through Initial Public Offerings (IPOs), surpassing London or New York.
In recent months, high-profile brands including Prada, Samsonite, Prudential and L'Occitane have successfully listed in Hong Kong. I hope we will see Scottish companies launching IPOs in Hong Kong soon. And this is very important.
It¡¦s not only the question of raising liquidity in a very profitable market, but also companies which are listed profile themselves throughout the Chinese nation, attracting investors in the nation. To these companies, this is almost free advertisement, the best way of profiling a company in a huge economic area.
As well as tapping wealthy investors from the Mainland and across Asia, a Hong Kong listing also helps companies promote their brands across the region. That includes a potential customer base of over a billion people in China alone.
Just imagine what that could do for your businesses!
Ladies and gentlemen, with me today are a number of representatives from Invest Hong Kong, our inward investment agency. InvestHK has a great track record of assisting companies, big or small, to set up in Hong Kong or expand their operations in our city.
They will be happy to share their experience and ideas with you. Please feel free to raise any questions with them about exploring the business potential in our neck of the woods.
Of course, we cannot guarantee that a business venture will succeed in Hong Kong, but we'll do our best to ensure that every company has the best opportunity to get it right.
Having said that, I can assure you, that the future in our part of the world is extremely bright.
We look forward to seeing more great Scottish ideas, innovations and products coming to Hong Kong soon.
Finally, a heart felt "thank you" to InvestHK, Scottish Development International and Scottish Financial Enterprise for organising this event.
I wish you all a very fruitful conference.
