The month of May has seen Hong Kong entering into a new era. Three elections have been successfully held since the implementation of the improved electoral system, which has blown a breath of fresh air into the special administrative region’s political ecosystem.
No more incessant politicization of anything and everything. Nowadays, proposals and ideas are being deliberated on their merit and the good of Hong Kong. John Lee Ka-chiu, a dedicated and capable patriot, has been elected as the next chief executive. The improved electoral system has ensured that Hong Kong people will behave as their own masters, and enabled all sectors to work together for the city’s socioeconomic development. As President Xi Jinping told John Lee at their meeting in Beijing, it is time for Hong Kong to move ahead with new plans to solve the deep-seated problems and focus on socioeconomic development.
The prospect for the global economy has been clouded by uncertainties, with new risks crouching in the shadows. Nevertheless, I’m confident that by leveraging “one country, two systems”, Hong Kong’s status as China’s gateway to the world will further strengthen. Under the 14th national Five-Year Plan (2021-25), the central government continues to support Hong Kong’s effort to strengthen its pillar industries, including international finance, shipping and trade, and has designated new roles to the city — as an international innovation and technology center, an international aviation hub and a regional intellectual property trade center. As national development continues, these roles will ensure Hong Kong’s continued prosperity. Hong Kong, as one of the key engines of the Guangdong-Hong Kong-Macao Greater Bay Area, must speed up its integration with other GBA cities to help drive the city cluster’s development, but enhancing economic and trade cooperation internationally is also important for Hong Kong to consolidate its competitive edge.
Seize RCEP opportunities by connecting China and ASEAN
Hong Kong should join the Regional Comprehensive Economic Partnership (RCEP) as soon as possible. The RCEP, which took effect on Jan 1 this year and has been signed by all 10 ASEAN countries plus China, Japan, the Republic of Korea, Australia and New Zealand, is the world’s largest free trade agreement. The bloc has a combined GDP of $26 trillion and gross exports of over $5 trillion, both accounting for about 30 percent of the global total. It sets to drive even deeper integration and greater expansion of Asia’s economy. The Asian Development Bank (ADB) has forecast that Asia’s share of global GDP will reach 52 percent by 2050. The “Asian Century” is coming. This should and will cause transformational changes from production strategy to market structure, consumer behavior and every element on the supply chain.
Hence I am especially delighted that John Lee has specified in his manifesto the need for Hong Kong to join the RCEP as soon as possible. I urge the SAR government and Hong Kong’s business community to study and plan ahead on how to respond to the new RCEP world.
One of the massive opportunities is the rise of a young, dynamic, middle-class population in ASEAN brought by sustained and rapid economic development in the last decade. The market is tinged with potential, and I believe the Chinese mainland’s brands with their quality and high value for money products are a perfect match. On the other hand, many Hong Kong enterprises have operated in ASEAN for years, often as manufacturers for international brands, and have good local knowledge and connections. We are a perfect partner for mainland brands, and the two should join hands to explore and capture the potential of the ASEAN market together.
ASEAN businesses to join in China’s internal circulation
I also believe manufacturing operators in ASEAN should start thinking about producing for China. Take the textile and garment sector as an example. A study has pointed out that China will overtake the United States as the world’s largest apparel consumer market by 2023. Yet ASEAN manufacturers, including Hong Kong companies operating there, are mainly producing for the US and EU markets, as indicated by the figures. In 2020, ASEAN’s apparel exports to China totaled $2.5 billion, compared with $21.6 billion to the US, $9.2 billion to the EU, and $6.3 billion to Japan. With duty being reduced and being completely eliminated in 10 years under RCEP, a competitive advantage in labor cost and railway network connecting ASEAN and China, there is great potential for ASEAN supply chains to produce for Chinese brands and the Chinese mainland market. This is especially true for Hong Kong companies as Chinese mainland brands like our new ideas, products and keen sense of the latest international fashion trends. In May, I spoke at an online conference, China and ASEAN: Opportunities for Apparel and Textile Manufacturing, held by the ASEAN Federation of Textile Industries, in which I explained China’s economic policy direction and shared my view on the tremendous opportunities of “dual circulation”. There was huge interest from the audience. Many ASEAN entrepreneurs asked for my assistance on the spot in organizing study tours to the Chinese mainland to understand the market situation and explore business opportunities with Chinese mainland brands when the pandemic eases.
Guard against risks in financial sector
Recent years have seen increasing complexities and volatility in the global situation, and there is an urgent need for measures to guard against risks in the financial sector of both the mainland and Hong Kong. Indeed, Hong Kong as Asia’s international financial center could be a target of speculative attacks. On this subject, I have put forward a series of proposals to the National People’s Congress with the aim of helping the Chinese authorities safeguard China’s financial security and have a bigger say in the financial market. For example, we should encourage the establishment of index companies and the creation of Chinese stock indexes that asset management firms and institutional investors can make use of in their exchange-traded funds and fund management operations.
Meanwhile, in the sectors of international professional services, such as legal, accounting and custodian services, which are now dominated by US and UK firms, Hong Kong’s authorities should promote diversity in market participants and practitioners so as to further consolidate the city’s position as a financial center. As John Lee said in his manifesto, we should attract high-quality companies, especially technology companies, from around the world, including ASEAN companies, to list on the Hong Kong Stock Exchange by relaxing its listing rules.
A new chapter of Hong Kong’s socioeconomic development
As we celebrate the 25th anniversary of Hong Kong’s return to China, I have never been more confident in the city’s future. The central government has built a new, secured platform for us to move forward. Over the ups or downs, Hong Kong has always had the backing of the motherland, and is in the best geographical location to capture the tremendous business opportunities offered by the Chinese mainland and the rest of Asia. As long as Hong Kong puts to good use its strengths and meets the needs of the country, it will continue to play an irreplaceable role in national development. I look forward to a new chapter of a more-prosperous Hong Kong.
The author is a Hong Kong deputy to the National People’s Congress, and chairman of the Textile Council of Hong Kong.
The views do not necessarily reflect those of China Daily.