Dr. Charles Yeung 【President】
Silver Bauhinia Star, JP
As we enter a new year, the global economy is still filled with uncertainty. Particular attention has been drawn to the implications of the US’ launch of the QE exit on the global economy. On the other hand, China has launched comprehensive measures for deepening its economic reform, which will help enhance economic cooperation between Hong Kong and the Mainland and add momentum to Hong Kong’s long-term economic development. Meanwhile, the HKSAR Government is conducting consultations and publicity on many issues including population policy and constitutional development. These issues are of critical significance for Hong Kong’s stable development. I would like to share some views on Hong Kong’s economic and social development in this new year.
Preparing for US’ QE Exit
Last month, the US Federal Reserve decided to gradually reduce its scale of bond buying from this month. We have to pay close attention to its impact on the economic development of Hong Kong, the Mainland and the globe. As what Financial Secretary John Tsang has reiterated, we must be alert to the risks of capital flow reversal and interest rates rebound potentially resulting from the US’ QE exit. I think Hong Kong enterprises should actively manage the risks by assessing the impact of any capital outflow from the region or emerging markets on their businesses and getting prepared for the impact of any interest rates hikes on their borrowings and cash flow.
Grasping Opportunities from China’s Financial Reform
Earlier, the CPC Third Plenary Session has approved a number of measures for promoting the reform of China’s financial system, furthering financial liberalization and fueling the development of the China (Shanghai) Free Trade Zone (FTZ). In my opinion, as an international financial center and a major internationalized platform for China’s financial liberalization, Hong Kong can make full use of its leading edge in financial system and industry development to take part in China’s financial development and facilitate the enhancement of marketization mechanism for RMB interest and exchange rates, playing a greater role in RMB internationalization.
I think Hong Kong can make it more convenient for third party economies to borrow and use RMB in Hong Kong, further diversify its RMB businesses and products, and step up efforts to drive the growth of its offshore RMB investment and asset management markets. These can help Hong Kong to strengthen its role and status as an offshore RMB center and explore the immense development opportunity arising from China’s financial liberalization.
Hong Kong can also capitalize on the various favorable mechanisms, such as CEPA, to further deepen its financial cooperation with Guangdong. For instance, it can forge closer financial partnership with Qianhai to, provided that national financial security is ensured, promote the two-way flows of key financial market elements and jointly establish a sound cross-border RMB business system that can provide more guiding experience for the country’s financial liberalization. Meanwhile, Hong Kong can play an active part in promoting the establishment of a “Guangdong-Hong Kong-Macau FTZ” and comprehensively reinforce its role as a Pan-PRD economic and financial center, so as to create more opportunities for its on-going economic development.
Adjusting Manpower Polices to Address Society’s Needs
Manpower is one of the key elements in effectively sustaining economic growth. Many sectors in Hong Kong are facing labor shortage. This, coupled with a rapidly aging local population, will pose challenges to the growth of the economy and industries in future.
While conducting a consultation on population policy, the HKSAR Government has put forward relevant manpower policy directions to address the need of economic development by, for example, attracting talents to return to Hong Kong and considering the import of foreign talents. I agree with these directions and believe the admission of foreign labor on a suitable scale without prejudice to local workers’ interests can help alleviate the shortages in some industries and job types. It will also be positive to the overall business environment, as well as the stable development of our economy and society in the long run.
In addition, the Government should create a more favorable environment and mechanisms that encourage young couples to have children and devote more resources to the nurturing of local talents. A multi-pronged approach is needed to upgrade the manpower of Hong Kong, and hence sharpen the overall competitiveness of society.
Supporting Gradual and Orderly Constitutional Development
The HKSAR Government has kick-started the public consultation on the “Methods for Selecting the Chief Executive in 2017 and for Forming the Legislative Council in 2016”. The consultation will lay a solid foundation for the discussion on Hong Kong’s democratic development and it also marks an important milestone for our city’s path towards universal suffrage.
In fact, the Central Government has been showing its determination and sincerity to promote democratic development in Hong Kong. We agree that the election of the Chief Executive must comply with the Basic Law and the interpretation and decisions of the NPC Standing Committee, and that the Chief Executive must be a person who “loves the nation and Hong Kong”. We believe it is the hope of the vast majority of Hong Kong people to have rational discussion on the topics of constitutional reform and universal suffrage with a peaceful, pragmatic attitude and with the principle of “One Country, Two Systems” and the core value of the rule of law upheld, so that our citizens can forge consensus on driving constitutional development forward in a gradual and orderly manner.