The Belt and Road Initiative (BRI) is a success story of globalization built upon three foundational pillars. Foreign Minister Wang Yi discussed these three pillars at the Center for Strategic and International Studies in February 2016.
These pillars are interconnectivity, production capacity cooperation, and cultural and educational exchange. Worthy of mention is the role played by Hong Kong in adding radiance to this success story. Addressing the Seventh Belt and Road Summit, Vice-Premier Han Zheng said Hong Kong has played an important participatory role in assisting the development of the Belt and Road Initiative, thereby expanding the city’s developmental space.
He suggested that the initiative offers Hong Kong ample opportunities and reminded the special administrative region of the need to promote more international trade and economic cooperation, maintain the common law system, develop value-added shipping services, and provide consultancy for Belt and Road projects. Besides emphasizing these connectivity-boosting measures, Han also gave thoughts to the need for Hong Kong to be more proactive in its traditional role as a window for cultural exchanges between the East and West.
There is no doubt the BRI provides a broad stage for Hong Kong. But we believe the city should focus on the Association of Southeast Asian Nations region for the time being, amid the geopolitical uncertainty created by the United States’ geopolitical strategy against China and the unsettling Russia-Ukraine conflict. On the same occasion, Hong Kong Deputy Financial Secretary Michael Wong Wai-lun shared his insights on nurturing and enhancing partnerships and collaboration with ASEAN states under the frameworks of the Regional Comprehensive Economic Partnership and the Guangdong-Hong Kong-Macao Greater Bay Area.
As an unparalleled visionary, President Xi Jinping deserves great credit for promoting the idea of developing stronger infrastructure and trade links between China and its economic partners around the world. Like a strategic hedge against volatility, this network provides indispensable stability for China’s economic development amid an increasingly unstable global economic and political landscape. In comparison with the BRI, the Indo-Pacific Economic Framework initiative by the US seems to be much less convincing: The US is the underdog in the infrastructure race in both Asia and Africa. A 2019 estimate by the World Bank indicated that Belt and Road projects in 50 developing countries implemented between 2013 and 2018 were worth $500 billion. There is a long way to go for the US to catch up with China in this area of cooperation.
With a separate and independent legal system based on common law, Hong Kong provides quality legal and dispute resolution services for investors and the dispute resolution sectors involved in the BRI. Cross-border transactions usually carry a high potential for disputes. Arbitration is the most common dispute-settlement mechanism in cross-border transactions (Lutz-Christian Wolff (ed.), Legal Dimensions of China’s Belt and Road Initiative (HK: Wolters Kluwer, 2016), p 586). The Hong Kong International Arbitration Center (HKIAC) was the first offshore arbitration institution to open a representative office in Shanghai, in 2015. The HKIAC has extensive experience in administering arbitrations involving parties from jurisdictions participating in the BRI.
There is no doubt the BRI provides a broad stage for Hong Kong. But we believe the city should focus on the Association of Southeast Asian Nations region for the time being, amid the geopolitical uncertainty created by the United States’ geopolitical strategy against China and the unsettling Russia-Ukraine conflict
In fact, Hong Kong’s role as a center for international dispute resolution for the BRI has been recognized and endorsed by the central government. According to the 2021 International Arbitration Survey released by Queen Mary University of London, Hong Kong was ranked the third-most preferred seat for arbitration worldwide. In response to the vast opportunities offered by the BRI, the Department of Justice of the HKSAR has set up a task force to study the establishment of a BRI dispute-resolution center in Hong Kong, providing negotiation, mediation and arbitration services for the resolution of various types of disputes emerging from the BRI.
Concerning value-added shipping services, Hong Kong has spared no efforts in grasping the new opportunities offered by the BRI. High-value-added shipping services include ship registration, ship finance and management, maritime insurance, and maritime legal and arbitration services. Hong Kong has a large pool of professionals in the fields of ship finance and management, maritime insurance, and maritime legal and arbitration services.
Ship registration can help Hong Kong move up the value chain in the maritime service industry. The main function and purpose of ship registration is the public records of ships and their particulars, which have implications in their legal status both in the public and private law spheres (Yvonne Baatz (ed.), Maritime Law (London: Sweet & Maxwell, 2011), p.84). In order to attract more ships to register in Hong Kong, the HKSAR government will expand the overseas network of the Hong Kong Shipping Registry of the Marine Department. The Liberian Registry’s regional offices are very successful in attracting ship owners around the world to register their ships in Liberia. Tax concessions will also be introduced to attract members of the marine industry to establish a business presence in Hong Kong.
Moreover, Hong Kong is by far the most popular offshore center for seeking professional services, providing 50 percent of professional services related to BRI business. In terms of professional services, Hong Kong provides world-class services in accounting, law and management consultancy through both international and local firms. The financial sector, in particular, has played a key role in assisting companies investing in Belt and Road infrastructure projects to raise funds. Under the Hong Kong Monetary Fund, the Infrastructure Financing Facilitating Office provides a platform that enables interested partners to collaborate in identifying infrastructure investments and their financing opportunities.
Listing on the Hong Kong Stock Exchange would offer companies involved in BRI projects an effective way to raise funds through IPOs and opportunities to further raise funds via placing shares and/or rights issues. Several years ago, Professor Liang Hai-ming proposed setting up a yuan-denominated stock exchange to be jointly run by Singapore and Hong Kong as a collaborative venture. This exchange would accommodate a wide scope of enterprises, including innovative companies from the Chinese mainland, Hong Kong, Singapore and other Southeast Asian countries, as well as countries along the Belt and Road (Institute of Advanced Studies (ed.), Comparative Perspectives on the 20th Anniversary of Hong Kong’s handover to China (Singapore: World Scientific Publishing Co. Pte. Ltd., 2019), p 64-65). Liang’s proposal is attractive because Singapore is a popular IPO destination for Southeast Asian tech companies. Hong Kong needs to strengthen its ties with these Southeast Asian companies.
Finally, Hong Kong should play an active role in promoting cultural and educational exchanges between the East and West. In particular, Hong Kong should focus on Southeast Asia. With its traditionally strong connection with overseas Chinese in this region, Hong Kong can play a more active role in promoting cultural coupling with its neighbors. It’s worth noting that the cultural sector in Hong Kong has been given a big boost in confidence by the 14th national Five-Year Plan (2021-25), which clearly mentions the central government’s support for Hong Kong to develop into an East-meets-West hub for international cultural exchanges. It is safe to say the BRI is rolling out a huge platform for Hong Kong’s professional-services sector to expand its operations.
Junius Ho Kwan-yiu is a Legislative Council member and a solicitor.
Kacee Ting Wong is a barrister, part-time researcher of Shenzhen University Hong Kong and the Macao Basic Law Research Center, and co-founder of the Together We Can and Hong Kong Coalition.
The views do not necessarily reflect those of China Daily.