Speech at Council Meeting 3rd debate session

Motion debate on the 2021 Policy Address

MR CHAN CHUN-YING (in Cantonese): President, the Policy Address delivered by the Chief Executive in October last year is the first policy agenda for Hong Kong to fully implement “patriots administering Hong Kong” and move forward from governance to prosperity, which is of special significance.

The Policy Address proposes to make good use of the country’s support for the development of Hong Kong as four traditional centres and for its positioning as four emerging centres, outlining a new blueprint for Hong Kong’s integration into the national development. As regards developing “the eight centres”, apart from identifying the role and positioning of Hong Kong, the Policy Address has also included some innovative measures and ideas that, if implemented effectively, will help Hong Kong gain a head start in the competition among cities of the world.

The financial services industry, as a pillar industry of Hong Kong, has always played the role of a bridge for international capital to enter the Mainland and for Mainland capital to go global, making it the most internationalized industry. In the Policy Address, enhancing Hong Kong’s status as an international financial centre is put in the first place and developing the financial services industry is given top priority. Both the Government and the financial services industry will do their utmost to not only consolidate our traditional strengths but also develop and expand new ones.

As regards expanding cross-border Renminbi (“RMB”) business, the Government will study the use of RMB for stocks traded southbound on the Hong Kong Stock Connect. In fact, after the launch of the Shanghai-Hong Kong Stock Connect in 2014, other Connect schemes have been gradually implemented, allowing Mainland capital to invest in overseas markets under controlled conditions and providing additional channels for international investors to invest on the Mainland. The average trading volume of the Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and Bond Connect has been growing, and the Cross-boundary Wealth Management Connect Scheme was launched in September last year, opening up a wider market for the financial services sectors of the three places. Measures such as allowing Hong Kong Stock Connect southbound transactions to be denominated in RMB are conducive to enriching the choices for Mainland investors and attracting more Mainland capital to the south, while further expanding the offshore RMB liquidity pool and strengthening Hong Kong’s role as an offshore RMB settlement centre.

However, in developing cross-boundary RMB business, digital RMB is very important. The Hong Kong Monetary Authority is studying on issuing central bank digital currency (“CBDC”) at the retail level, and I have repeatedly expressed my hope for the authorities to work also on the wholesale level, especially on interbank applications. In order to attract family offices to establish their presence in Hong Kong, the Policy Address mentions that consideration will be given to providing tax concessions so as to enhance Hong Kong’s status as an international asset and wealth management centre. By the end of 2020, local assets under management of the asset and wealth management business were close to HK$35 trillion. According to statistics of KPMG, although the business environment is becoming more challenging, Hong Kong’s private wealth management industry is still on a growth momentum with a 25% increase in size from HK$9.1 trillion in 2019 to HK$11.3 trillion in 2020, and continuous optimization of tax arrangements is expected to facilitate continuous development of the local wealth management market.

In developing Hong Kong into a regional carbon trading centre, Hong Kong has many favourable conditions, including a huge financial market and a sound international regulatory framework, as well as a convergence of world-leading financial and professional institutions, green assessment and certification bodies and international investors. The Policy Address proposes supporting the Hong Kong Exchange and Clearing Limited to promote cooperation with the Guangzhou Futures Exchange in financial product development related to the areas of carbon emission trading. If successful, it is believed that Hong Kong can move towards becoming a green and sustainable financial hub in the region.

On promoting cross-border financial technologies (“Fintech”), the Policy Address proposes to actively explore with the Mainland the formation of a one-stop sandbox network to facilitate improvements to Fintech products and services conceived by financial institutions, thereby speeding up the full launch of such products and services. Fintech is the future of the development of our industry and Hong Kong’s Fintech integration with the Mainland is a major trend. The initiative can promote cross-border Fintech cooperation and facilitate financial institutions and technology companies in Guangdong, Hong Kong and Macao to test cross-border technology applications.

As for the other seven centres, the Policy Address proposes to continue to enhance Hong Kong’s advantageous status as traditional centres in three areas, namely international transportation, trading and legal services. Considering Hong Kong’s advantages in innovation, it is proposed to vigorously develop Hong Kong into an innovation and technology (“I&T”) hub, a centre for international cultural exchange, an intellectual property trading centre, and consolidate its status as an international aviation hub. These measures of developing “the eight centres and hubs” will help to achieve three very important goals.

First, they will help the country to move towards high quality development. This series of measures on financial services development proposed in the Policy Address will facilitate, both in depth and breadth, interconnection between Hong Kong’s capital markets and the outside world, which is a manifestation of the transformation and upgrading of the financial services industry to high quality development.

Second, the measures can complement the strategy of I&T development of our country. In recent years, while the Mainland has been developing fast in I&T, Hong Kong possesses top-notch scientific research capabilities, so we can complement each other with our relative advantages. The Policy Address focuses on the field of I&T, and strives to strengthen forward-looking deployment in land supply, research and development, investment, etc. so as to develop Hong Kong into an international I&T hub and contribute to the country’s achievement in technological self-reliance and self-improvement. This will also help Hong Kong to enhance its own economic structure and gain new momentum for development.

Third, the measures can contribute to the country’s “dual circulation” strategy. Hong Kong started its development with entrepot trade, and foreign trade activities have always played a core role in our economy. The Policy Address proposes a multi-pronged approach to build a “Smart Port” to enhance the function and professional services of Hong Kong as an international trade centre. The targeted measures to establish its status as a transportation centre and an aviation hub will enable Hong Kong to become a core functional city in the Greater Bay Area (“GBA”) in the future, and continue to promote the liberalization and facilitation of cross-border trade and investment, as well as smart development in aviation and transportation, so as to actively integrate into the “dual circulation” strategy.

Another highlight of the Policy Address is the Northern Metropolis, which is the largest planning blueprint since the establishment of the HKSAR Government. A large area of land bordering the New Territories and Shenzhen will be developed into a metropolis good for people to live in, work and travel. With I&T industry as the economic engine, the development of the Northern Metropolis will bring a strategic change to the spatial development and economic paradigm of Hong Kong. Cooperation of the twin cities, i.e. Shenzhen and Hong Kong, in I&T, business, infrastructure and tourism as the main axle will bring us unprecedented growth potential for future economic and social development, and will in turn solve the long-standing housing and land supply problems that have plagued the community.

In the future, Hong Kong will enter into a new development paradigm with South-North dual engine of developing financial services in the south and I&T in the north, which will lead to a more balanced development of the city. However, the development of the metropolis requires the Government to not only adopt new ideas, but also comprehensively review and optimize the efficiency of research, decision-making and implementation by various departments. Focusing on the objectives of these development projects, the Government should formulate detailed implementation plans, or even engage the private sector as soon as possible, because in the past, there have been huge cost overruns and project delays in the construction of large-scale infrastructure projects in Hong Kong. Given this construction project spanning as long as 20 years, the Government must learn from the experience and plan well before taking action, so as to avoid repeating the same mistake.

As for the Government’s initial ideas of reorganizing its structure to expand the existing three Secretaries of Departments (“SoDs”) and 13 Directors of Bureaux (“DoBs”) to three SoDs and 15 DoBs, I am glad to see the current-term Government put forward the proposal in response to the long-standing expectations of this Council and the community. There have been criticisms about the bloated government structure and lack of coordination among the bureaux, with individual bureaux being overloaded. The Transport and Housing Bureau (“THB”) is a good case in point. The split of THB will obviously enable a clearer delineation of responsibilities and integration of resources, and promote division of duties, so as to better promote policies and measures on transport and housing, especially in the development of the Northern Metropolis. I believe the proposed split will receive wide support. However, although the split of THB has responded to the voices of all of us, the portfolios on housing and development have not been consolidated under the same Policy Bureau. Yesterday, the Secretary of Department explained again in the previous session that a merge is not the best option, less the scope of work will be too extensive. Although the two Policy Bureaux cannot be merged, the Government should try to strengthen the coordination of the two Policy Bureaux to effectively shorten the time for land development and housing construction, in order to achieve better results than before the reorganization.

President, looking ahead, the greatest opportunity for global development lies in China, and the greatest opportunity for Hong Kong’s development lies in the Mainland. The 14th Five-Year Plan, the development of GBA and the Qianhai Plan are a series of policies demonstrating the strong support of our country for Hong Kong. The Policy Address has accurately identified the role and positioning of Hong Kong in the overall development of the country, which will enable us to make better contributions in the new journey of national development. The theme of the Policy Address, “Building a Bright Future Together”, presents the public a brand-new blueprint for governance with determination to make progress, improve people’s livelihood and promote comprehensive social development. I believe if all the important plans are implemented, there will surely be a better tomorrow for Hong Kong.

With these remarks, President, I support the Motion of Thanks.