(Chinese Focus Face to Face) Hong Kong "Treasurer" Analyzes the Three Major Opportunities in Hong Kong-Interview with Hong Kong Financial Secretary Chen Maobo
China News Service, Hong Kong, November 6th, title: Hong Kong "Treasurer" analyzes the three major opportunities in Hong Kong-an interview with Hong Kong Financial Secretary Chen Maobo
China News Agency reporter Liu Chenyao Wang Jiacheng Li Yue
The Fifth Plenary Session of the 19th Central Committee of the Communist Party of China closed in Beijing a few days ago. The meeting made arrangements for China’s 14th Five-Year Plan and put forward a 2035 long-term goal.
Facing the new national plan, how can Hong Kong reverse the current negative economic growth pressure?
How to consolidate its status as an international financial center?
How to make use of unique advantages in national planning and the construction of the Greater Bay Area?
Chen Maobo, Financial Secretary of the Hong Kong Special Administrative Region Government, gave an authoritative analysis in an exclusive interview with China News Agency "China Focus Face-to-face".
Reporter from China News Service: This year is the final year of the "13th Five-Year Plan". Looking back at the Hong Kong and Macao special chapters at that time, it specifically mentioned the need to "deepen the cooperation between the Mainland and Hong Kong and Macao" and "support the enhancement of the economic competitiveness of Hong Kong and Macao." At that time, there were many commentaries saying that Hong Kong was facing a major opportunity. Looking back on the past five years, what opportunities do you think Hong Kong has seized and what kind of development has it brought?
Chen Maobo: One of the 13th Five-Year Plan is to consolidate and enhance Hong Kong's status as an international financial, shipping, and trade center.
In this regard, we have made great progress in the past five years, and we must thank the central government for its support.
For example, in the financial market, there were about 900 mainland companies listed here in 2015, and now there are about 1,300.
The market value was about 15 trillion (Hong Kong dollars, the same below) at that time, and has now increased to more than 33 trillion.
In the stock market, about 70% of transactions with mainland-related companies at the time were about 70%, and now more than 80%.
The market value was probably more than 60% back then, and now it is close to 80%.
It can be said that due to the policy support of the central government, mainland enterprises have gone international and come to Hong Kong for investment and financing, which has pushed our stock market to a new level.
The Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, accepted an exclusive interview with China News Agency "China Focus Face to Face".
Photo by China News Agency reporter Zhang Wei
China News Agency reporter: This year is an unusual year. Because of the epidemic, all industries in Hong Kong have been affected to a certain extent. When we reviewed SARS, the rapid recovery of the economy was related to the opening of the mainland residents' personal tours to Hong Kong and Macau by the central government at that time, and the signing of the CEPA (Mainland and Hong Kong Arrangement for Closer Economic and Trade Relations). The situation is very different this year, and the epidemic lasted particularly long. Under such circumstances, if Hong Kong wants the economy to recover as soon as possible, what kind of countermeasures do you have?
Chen Maobo: When SARS was in 2003, we actually went from the Asian financial turmoil in 1998 to the explosion of U.S. Internet stocks and then to SARS. The economy went down for a while.
It was very difficult at the time. Housing prices dropped by more than 60% and the unemployment rate reached more than 8%.
At that time, the state gave us policy support, free travel and CEPA, so we rebounded very quickly at the bottom of the valley.
We estimate that the economic recovery after the new crown pneumonia epidemic may not be able to have a V-shaped rebound in the past.
This time it may take longer.
However, we should not let short-term and immediate difficulties obscure long-term opportunities.
The development of the Guangdong-Hong Kong-Macao Greater Bay Area is very important to Hong Kong.
We are a relatively mature economy, with a per capita GDP exceeding US$46,000 and a population of more than 7 million.
However, when a relatively small market develops to this stage, it has to go up to another level. The Guangdong-Hong Kong-Macao Greater Bay Area is (very important) for us. On the one hand (the Greater Bay Area) is a large market, (Hong Kong can ) Deducted into the internal circulation of the Mainland through the Greater Bay Area.
On the other hand, in terms of industry, we are mainly finance and real estate. If we can promote each other with Shenzhen, Guangzhou, and other sister cities, in terms of innovation and technology, and advanced manufacturing, it will give us another step.
So although it will take some time for the economy to recover in the short term, it is still relatively optimistic in the medium and long term.
From the perspective of the country's internal and external circulation and mutual promotion, it is also proposed that the national development strategy of reform and opening up is unchanged, and is a two-way opening up at a higher level.
As an important gateway and bridge between the country and the world, our role in this regard is still very important, and it also provides us with opportunities for development.
The Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, accepted an exclusive interview with China News Agency "China Focus Face to Face".
Photo by China News Agency reporter Zhang Wei
China News Service: This year, the SAR government seems to have also adjusted its "spending money" style. It has launched multiple rounds of anti-epidemic funds and distributed 10,000 yuan per person for the first time. However, you have predicted in your budget that you may record deficits on the operating accounts in the next few years. Is the SAR government prepared to deal with the continuing fiscal deficit?
Chen Maobo: In general, there will be a deficit every year for the next five years, but the amount is not very large, about 10 billion to 20 billion to 30 billion.
Our total annual expenditure is more than 600 billion yuan, so it is a relatively balanced budget in the overall layout, especially considering that the international environment is so complicated and we are facing an economic downturn.
It is now estimated that by the end of March next year, there will be more than 800 billion fiscal reserves. This level is about 12 or 13 months of our expenditure, which is relatively stable.
In the future, on the one hand, the SAR government must continue to invest (important infrastructure), especially when the economy is down, government investment is important.
On the other hand, we have to enter a period of consolidation for recurrent expenditure, and we cannot increase it casually.
In terms of income, we have also done some research.
There are also varying degrees of competition in taxation internationally.
In this regard, if we can increase revenue without affecting our competitiveness, we will actively consider it.
It is too early to say in this regard, and there is not a plan to be done right away.
The society needs to have a certain amount of discussion, and it must be conducted with caution.
The Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, accepted an exclusive interview with China News Agency "China Focus Face to Face".
Photo by China News Agency reporter Zhang Wei
China News Service reporter: We have recently noticed that many different stakeholders are making some appeals to the SAR government, hoping to use fiscal reserves to help the society tide over the difficulties. But to maintain financial security, you must also maintain financial stability. How do you balance the two?
Chen Maobo: Under the special arrangement of "one country, two systems", Hong Kong has a very special situation, which is also a historical reason, that is, the Hong Kong dollar is pegged to the US dollar.
This is very important for financial stability, and it is also very important for the stability of society and people.
Article 107 of the Basic Law mentions that we must balance our revenues and expenditures and avoid deficits.
At the same time, expenditure growth must match economic growth, which is a requirement of fiscal discipline.
On the other hand, Articles 111 to 113 of the Basic Law also mentioned that the Hong Kong dollar should remain freely convertible, no foreign exchange controls should be implemented, and funds can flow in and out freely.
When we issue Hong Kong dollars, we need to have 100% reserve support.
Therefore, the linked exchange rate system has a certain design. This design ensures financial stability, but also limits some space.
We can say that there is no room for monetary policy.
Interest rates are basically linked to the U.S. dollar and also linked to the U.S. dollar interest rate.
Nor can we issue debts casually, nor can we casually increase the money supply.
Therefore, fiscal policy and fiscal reserves are very important to us.
This also explains why I just said that when the economy is down and the external environment is difficult, on the one hand, we have to help the people and support economic development. If money is needed, it should be used or used.
At the same time, be cautious and use it carefully.
For example, when social incidents occurred last year, there was a period of time when people were worried that funds would flow out, which would cause problems in Hong Kong's financial stability.
A while ago, the so-called sanctions of the United States, there are many different speculations in the market, whether it will cause financial stability problems.
Looking back, our financial market is very stable.
Therefore, it is important to have a certain fiscal discipline and maintain a certain fiscal reserve so that we can maintain financial stability.
In the middle, we must carefully balance.
The Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, accepted an exclusive interview with China News Agency "China Focus Face to Face".
Photo by China News Agency reporter Zhang Wei
Reporter from China News Service: As you said just now, there have been many welcome signs in Hong Kong recently. I remember you said in July that since April, more than 100 billion of funds have flowed into Hong Kong for three consecutive months. In October this year, the number of aggregate balances recorded in the Hong Kong banking system was the highest since 2016. There may be a large wave of high-quality companies coming to Hong Kong for listing. What kind of signal did these reveal to us?
Chen Maobo: This also means that as an international financial center, stable exchange rate and free flow of funds are very important core competitiveness.
From April to now, more than 300 billion Hong Kong dollars have flowed in.
So our bank balance is now more than 400 billion, which is very high.
Some friends once asked: With so much money coming in, are you going to go out together and hit the linked exchange rate?
Will there be problems with financial stability at that time?
There are also these speculations and concerns.
I can tell everyone that if the money comes in, we give him Hong Kong dollars, take the US dollars, or invest in US dollar assets, and be ready at any time.
You can come in or go wherever you want, and it can be exchanged for you, and it won't affect our financial stability.
In the past six months, many mainland companies listed overseas have returned to Hong Kong for a second listing. This is a vote of confidence in our stock market and is very important.
We also took a look, and there are still many waiting in line.
Some of them are relatively large in scale, which also attract the interest of many people.
The funds that flowed in during this process have also been mobilized by society.
We are very careful to supervise, and we haven't seen any special circumstances.
This also means that the operation of our financial system is still orderly and smooth.
Data map: Hong Kong, the urban landscape of Aberdeen.
Photo by Shi Baoxiu Image source: CTPphoto
China News Service reporter: Can we understand that under the raging international epidemic situation, funds continue to flow into Hong Kong. Is it because international capital still has confidence in the Hong Kong dollar and Hong Kong's status as an international financial center? Is that true?
Chen Maobo: I am very confident in our financial system and financial system.
This also broke some previous guesses with actions.
Mainly, national security legislation and the so-called US sanctions on Hong Kong will affect our status as a financial center.
These international funds, where there are opportunities, where there is a future, good business, and profitable, he will come.
So the most important thing is, on the one hand, to make good use of the development opportunities that the country gives us to develop our financial center.
At the same time, it is necessary to constantly be vigilant in terms of monitoring, constantly dynamic, long-term, cross-sectoral (cross-sectoral is equivalent to the banking system, stock market, foreign exchange market) linkage all-weather supervision.
If we do this job well, we can make good use of these funds in a relatively stable situation.
China News Agency reporter: The mainland economy is now recovering rapidly, and the central government has also proposed a new development pattern. What opportunities do you think the rapid economic recovery in the Mainland provides for Hong Kong?
Chen Maobo: The help of the rapid economic recovery in the Mainland can be seen in the third quarter.
In the third quarter, the mainland economy grew by about 4.9%, and exports increased a lot, which also drove Hong Kong's imports and exports to resume growth in the third quarter.
In September, our exports increased even more.
It can be said that the economic recovery in the Mainland has an immediate impact on us.
In addition to foreign trade, we also hope to seize opportunities in the internal cycle.
The promotion of internal circulation by the country is a great opportunity for Hong Kong.
On the one hand, in order for the country to increase domestic demand, in addition to volume, there is also an enhancement.
As far as Hong Kong is concerned, we encourage Hong Kong companies to spend more energy in opening up the mainland market in addition to exporting some high-quality products.
On the other hand, due to the large domestic demand, Hong Kong businessmen can obtain high-quality products from overseas in terms of trade. How to build a decentralized channel is also an opportunity.
Data map: Hong Kong Bank of China Tower.
Xiaoyun Photo Source: Visual China
China News Service: The Central Plenary Session closed in Beijing last Friday. At the meeting, China’s "14th Five-Year Plan" was deployed and a long-term goal for 2035 was also put forward. From this, what opportunities do you see Hong Kong will face and what role will it play in it?
Chen Maobo: In terms of economy, there are actually three key points: one is domestic demand; the other is innovation and technology; and the third aspect is two-way reform and opening up at a higher level.
With regard to domestic demand, Hong Kong is deducted into the internal circulation through the Greater Bay Area, and Hong Kong companies have great development opportunities.
In terms of external circulation, Hong Kong's special role will continue to play a role.
In the financial market, at the end of March this year, 70% of foreign investors' investment in Mainland A shares were through Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect bonds.
Global investment will increase the proportion of investment in the Mainland in the future.
In this process of increase, Hong Kong can play a role.
Attract scientific and technological talents, innovation and technology institutions, and innovation and technology companies to settle in Hong Kong, and make good use of the neighboring relationship with Shenzhen. In this regard, we (also) have a lot of room for development.
Reporter from China News Service: Based on all current internal and external environmental factors, what do you think Hong Kong will have in the future?
Chen Maobo: I think that in the future, apart from the financial industry and financial service industry, innovation and technology will be the direction of our efforts.
In terms of trade and shipping, air transport has a lot of room for development.
As an international aviation hub in the Greater Bay Area, before the epidemic, there were more than 1,000 flights departing from Hong Kong every day to more than 200 overseas terminals.
In terms of freight, it is about 4.6 million metric tons a year, ranking first in the world.
In terms of passenger volume, it probably exceeds 70 million, ranking fourth in the world.
We are now doing the (airport) three-run. After finishing it, we can handle more than 100 million people and more than 9 million tons of freight in a year.
There is a lot of room for development in the development of the third-party logistics industry and high value-added logistics services.
This is another strength we can play as an international aviation hub in the Greater Bay Area.
The third aspect is to promote people's exchanges between the two places.
During the "Thirteenth Five-Year Plan" (period), several important cross-border infrastructures were completed, including the Hong Kong-Zhuhai-Macao Bridge, the Guangzhou-Shenzhen-Hong Kong High-speed Railway, and the Liantang/Xiangyuanwei Highway.
The one-hour living circle has been established, and within three hours, it basically covers the entire Pearl River Delta, which is very convenient for people in the two places.
If Hong Kong citizens and young people in Hong Kong are interested in developing and living in the Greater Bay Area, it will be more convenient.
Therefore, this is not simply economic, it is society and people's livelihood.
So I am very optimistic (about the future of Hong Kong).
(Finish)