UK looks to opportunities in Hong Kong
The city is set to play a key role as Britain prepares to reshape its place in the world following Brexit.
05 November 2019
As the United Kingdom’s likely departure day from the European Union draws near, the country’s leaders are looking for fresh opportunities worldwide; strengthening their already well-established relationship with Hong Kong is an obvious option.
The British Guest of Honour at the Hong Kong Trade Development Council’s annual Hong Kong Dinner in London at the end of October was John Glen, a Member of Parliament and Economic Secretary to the Treasury in the UK government. He described Britain and Hong Kong as bastions of commerce and trade, their economies characterised by world-leading innovation, skilled workforces, flexible labour markets, and a global outlook, all underpinned by strong, adaptable and far-sighted institutions.
He said the UK’s partnership with Hong Kong is growing stronger all the time.
Focus on finance
Mr Glen highlighted fintech and green finance as areas where Hong Kong and Britain can work together.
“As we leave the European Union, it should come as no surprise that our journey of opportunity and ambition takes us to the mouth of the Pearl River, and to one of our oldest and closest financial partners,” he said. “From here, there is a world of opportunity stretched before us, among the rising economies of the East, and the global markets beyond.
"The United Kingdom and Hong Kong are bound together in so many ways, not least our shared commercial zeal. Our partnership is already strong but has the potential to be stronger still. And it is my sincere belief that if we stay true to the values we share, a prosperous future awaits,” he said.
“Last October, our regulators reached an agreement to allow Hong Kong and UK investment funds to be sold in each other’s markets. This Mutual Recognition of Funds Agreement provides a streamlined process, strengthening our respective positions as two of the world’s leading centres for asset management.
“I think it’s fair to say that May’s UK-Hong Kong dialogue (the inaugural UK-Hong Kong Financial Dialogue held in London on 7-8 May this year) marked something of a step change. It was the first time our governments have come together to discuss financial services in this way. And it took our relationship beyond the traditional areas of cooperation and into new and exciting areas of opportunity.”
Boosting links with Hong Kong is part of a broader drive by the UK to strengthen its links across the world, especially in Asia. Just two days before the HKTDC dinner, Mr Glen had addressed the UK Financial Services Beyond Brexit Summit in London.
“Let’s not forget – London has never just been a European financial centre. It has always been a global one,” he told delegates.
“Much has already been said about the ability to strike free trade agreements once we’re outside the EU. These are important. But when it comes to financial services, I know the City is looking to go further and deeper. We want to create a new gold standard in global financial cooperation,” Mr Glen said.
Welcoming guests to the dinner for the first time as Chairman of the Hong Kong Trade Development Council (HKTDC), Dr Peter K N Lam said Hong Kong’s fundamental strengths continue to make it the ideal platform for British businesses to access vibrant Asian markets and find new opportunities as traditional markets become saturated.
“I’m sure, as friends of Hong Kong, many of you have been following the recent protests with interest and concern,” Dr Lam said.
“Indeed, the city is facing complex issues at this time. But its fundamental strengths are sound. Hong Kong is a free and open society with a strong foundation of rule of law and a positive attitude to international business.
“It is also a resilient and pragmatic city. I am confident that we will find a way to overcome these challenges and come out stronger. That is why we are here today. To assure our British friends that we are confident in our future and committed to our partnership with the UK,” he said.
The Hong Kong guest of honour at the dinner was Paul Chan, Financial Secretary of the Hong Kong Special Administrative Region, who delivered the keynote address outlining Hong Kong’s current economic outlook.
“However Brexit plays out, I'm here, as you are, to celebrate the enduring friendship of Hong Kong and the UK, a bond rooted in history and today flourishing, as never before, in business, in financial services, in arts and culture, in education and so much more,” Mr Chan said at the dinner.
“The numbers underscore our deep ties. Merchandise trade between us last year reached £11.2 billion [US$14.5 billion], up 14.6% over 2017 totals. Through the first six months of 2019, bilateral trade continued to grow by a resounding 18.3%, year-on-year.
“Not surprisingly, well over 700 UK companies keep offices in Hong Kong; nearly half of them are regional offices or regional headquarters. They're among the more than 9 000 international and mainland companies that call Hong Kong home. And that's up some 10% over just two years ago. Those companies, let me add, employ nearly half a million people in Hong Kong. Now, despite the recent social incidents, Hong Kong remains an efficient, resilient and competitive economy,” Mr Chan assured attendees.
As the UK gets ready for Brexit, Hong Kong has been facing up to its own challenges, having been hit by a spate of social unrest. However, Mr Chan stressed that the city’s economic fundamentals and its openness to the world remained strong.
“Despite all the challenges, I'm here to tell you that Hong Kong's fundamentals are working just fine. Our institutional strengths and unparalleled competitiveness remain intact.
“One telling hint of that is our financial stability. As a matter of fact, if you look at our stock market, our banking system, our fund flow, the HKD to USD peg, there's little to suggest that we have been going through a testing time since early June, both as a society and as an economy.
“Just last month, the Global Financial Centres Index, published by London think tank the Z/Yen Group, gave Hong Kong an unequivocal vote of confidence. The Index once again ranked Hong Kong third, trailing New York and barely behind London.
“I was in Washington DC less than two weeks ago for the annual meetings of the IMF and the World Bank Group. There, I met with Moody's and Standard & Poor's. Both of them recognised Hong Kong's fiscal strengths in their latest reports. S&P affirmed our AA+ long-term credit rating and our ‘stable’ outlook rating.
“There's more good news. The World Economic Forum's Global Competitiveness Report released earlier this month ranked Hong Kong third, markedly up from last year's seventh-place finish.
“Hong Kong was also named the world's second-most competitive economy in this year's World Competitiveness Yearbook published by the Swiss-based International Institute for Management Development.”
Window to a world of capital
Mr Chan also highlighted one of Hong Kong’s key advantages – its role as a gateway to the gigantic and rapidly growing market of Mainland China.
“Our advantage here is clear and endlessly compelling. Hong Kong is as national as it is international. More than one of the world’s major financial centres, we are China’s international financial centre. And that is not going to change.
“With nearly 200 banks, including the world’s largest bank and 77 of the top 100, Hong Kong is China's window to a world of capital,” he said.
“Not surprisingly, the mainland looks to Hong Kong, our capital formation and professional services prowess, to help power the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area development. Hong Kong has the experience, the expertise and the connections to match global investors and fundraisers with project owners from Mainland China and around the world. In this, our options are wide-ranging.”
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