Hong Kong SAR should boost its shipping-center status

2022 has made history — it marks the 25th anniversary of Hong Kong’s returning to the motherland, and it opens a new chapter in practicing “one country, two systems”. For Hong Kong, or a “port of fragrances”, shipping has been pillaring the local economy for decades. As President Xi Jinping expressed in his speech on July 1 that “Hong Kong should maintain its distinctive status and advantages”, it is necessary to review the past achievements and evaluate current issues in the shipping industry for a better future.

Hong Kong established the world record for port handling capacity back in 1974, making it one of the busiest ports in the world. Thanks to the Chinese economic reform, Hong Kong successfully transformed into an entrepot, becoming not only the “busiest” but also the “most important” container port. In 1987, Hong Kong was known as the world’s largest container port. Benefiting from the mainland’s economic blastoff and the rapid development of the global trading trend, Hong Kong’s port handling capacity had come first in the world rankings 12 times between 1992 and 2004, laying a solid foundation for Hong Kong as an international shipping center.

In recent years, the special administrative region government has made various efforts to consolidate Hong Kong’s position as an international shipping center in multidimensions. The 2018 Policy Address made it a goal to tap the high-end shipping industry to a “full steam” stage. The Hong Kong Special Administrative Region government has further studied tax concessions in the past two years to attract the business principals to expand or set up their businesses in Hong Kong. In addition, in 2019, HK$200 million ($25.5 million) was allocated to the Maritime and Aviation Training Fund to nurture local maritime talents. Thanks to these measures, remarkable achievements have been made to strengthen Hong Kong’s status as an international shipping center.

President Xi emphasized in his speech that the central government fully supports Hong Kong in its efforts to maintain its distinctive status and to play to its advantages, particularly by reshaping its presence as an international shipping center

However, recent years have witnessed the city’s glory declining in many respects, which has persuaded the public that the shipping industry is losing its strength and has entered a hopeless “sunset” stage, making it a real concern for a port city like Hong Kong.

President Xi emphasized in his speech that the central government fully supports Hong Kong in its efforts to maintain its distinctive status and to play to its advantages, particularly by reshaping its presence as an international shipping center.

A faithful implementation of “one country, two systems” is meant to facilitate Hong Kong’s overall development and maintain its status as an international financial, shipping and trade center. The central government has shown strong support toward Hong Kong in consolidating and improving its status as an international shipping center in both the 14th Five-Year Plan (2021-25) as well as the Guangdong-Hong Kong-Macao Greater Bay Area plan. Therefore, formulating the future of Hong Kong’s shipping industry is significantly meaningful both in economic and political terms.

Chief Executive John Lee Ka-chiu has explicitly stated that Hong Kong must substantiate its international shipping center status by venturing into high-value shipping and logistics services and maritime legal services. With this aim in mind, a goal-oriented plan and a to-do list are necessary. As the Transport and Logistics Bureau has now been established, the HKSAR government shall join hands with the industry to formulate a long-term and comprehensive strategic plan for maritime development and outline the visions and goals for the next 20 to 30 years.

Therefore, it is of essential importance to cultivate the investment environment by attracting traders to transact in Hong Kong so as to gather more shipping companies in Hong Kong and hence facilitate the coordinated environment between legal, insurance and other fields.

Besides, as the world’s leading international financial center, combining financial services with shipping services (a so-called “finance+shipping” service mode) will be a lucrative market niche for Hong Kong to claim its unique status. As a highly carbon-intensive industry, the global maritime industry is under enormous pressure to reduce emissions. According to a forecast by the World Bank, the widespread use of zero-carbon fuels will bring the marine fuel market more than $1 trillion in financing needs. Some banks have also estimated that to achieve the 2050 target set by the IMO, an investment of $1.4 trillion to $1.5 trillion will be necessary. This will undoubtedly bring tremendous opportunities for Hong Kong’s finance+shipping, where it is necessary to actively develop new financial instruments to meet the green financing needs regarding shipping decarbonization.

In this regard, the HKSAR government will play an essential role, including the establishment of a green shipping fund, and cooperate with the industry in the research and development of low-carbon technologies and the development of sustainable shipping solutions, so as to shape a leading role for Hong Kong in the future of the shipping industry.

This is a new starting point for a new journey. The legend of Hong Kong started from the ocean, and the coastal city gains its strength with its financial prowess. Hong Kong can ride a wave with its well-developed financial industry to the ocean in the upcoming 25 years.

The author is principal representative of the International Chamber of Shipping (China) Liaison Office, and a co-opted member of the Hong Kong Maritime and Port Board.

The views do not necessarily reflect those of China Daily.