After a hiatus of five years, the HKGCC Business Summit made a resounding comeback on 10 May, held under the theme “Hong Kong – A New Era” and featuring top government officials and elite business leaders.
Chamber Chairman Betty Yuen kicked off the event with a warm welcome to the speakers and guests. “How we sustain Hong Kong’s future economic development in the context of our connections with the Mainland and the rest of the world is an extremely important topic. Today, we are honoured to have some of the brightest political and business minds in Hong Kong sharing their expertise and vision,” Yuen told the full-house, before handing over to Keynote Speaker Financial Secretary Paul Chan.
In his speech, Chan said Hong Kong’s economic growth at the turn of the year was better than 2022, with a forecast of 3.5 to 5.5% growth for the whole year. “After three difficult years, while economic growth is important, it is equally important that there are smiles all around,” he said.
Chief Executive John Lee – who delayed a trip to the Mainland in order to deliver the Keynote Luncheon Address – emphasized the city’s advantages under One Country Two Systems, and invited the audience to let the world know “We mean business.”
In the two panel discussions, titled “Hong Kong’s Future as an International Business and Financial Hub” and “Traditional and New Drivers of Hong Kong’s Economy,” a cross-section of distinguished speakers took a deep dive into how the city as an IFC can adapt to the post-pandemic world, and reinvent traditional industries as new engines of economic growth.
Hong Kong’s Future as an IFC
Fielding a question on safeguarding Hong Kong from international banking crises, Eddie Yue, Chief Executive, Hong Kong Monetary Authority, said the city’s banking system is safe and resilient, pointing out that the average capital adequacy ratio of banks exceeds 20%, as compared with the international standard of 8%. “For our banks, we don’t see any issues observed elsewhere. The exposure of Hong Kong’s financial system to those affected banks is minimal,” he said.
Dr Peter Wong, Chairman, The Hongkong and Shanghai Banking Corporation Limited, said the SAR’s banking sector also has a significant role to play in the GBA. Hong Kong, as a fund-raising centre and a bridge to the Mainland, accounts for two-thirds of investment into China. One way to capitalize on this, he noted, is to help companies established here gain better access to the region.
Meanwhile, focus must continue on attracting international investments and talent in the wake of pandemic-induced disruptions to businesses, Yue said. Julia Leung, Chief Executive Officer, Securities and Futures Commission, agreed that the challenges of the past three years have made us think hard about how to win back investors. “However, our capital market is extremely resilient,” she said. “Abundance of liquidity, very strong risk management, and close surveillance – these are things we do well.”
But playing defence is not enough. “It is important to excel in our role as a super connector of capital markets between the Mainland and the rest of the world,” she stated, adding that Hong Kong must look at what it can offer to serve the national strategy. “Mutual market access schemes such as Stock Connect and Bond Connect have exceeded expectations, but we will need to scale them up and include more RMB and other products. For instance, the new Swap Connect will allow institutional investors to access the Mainland’s interest rate swap market.”
Leung said Hong Kong must stay at the forefront in tech and green finance and diversify sources of listing, citing as examples the recent specialist tech regime and the success in attracting listings of biotech firms.
Explaining the implications of the overhaul of China’s financial regulatory framework, Jack Chan, Chairman, EY China, and Regional Managing Partner, EY Greater China, said the establishment of the National Financial Regulatory Administration will facilitate foreign financial institutions to formulate and implement their strategies in the Mainland. He suggested that Hong Kong’s financial institutions should continue to allocate more resources to vigorously expand business in the Mainland as Hong Kong is the preferred offshore financial platform for Mainland enterprises, with high quality banking services and a mature capital market.
On the topic of RMB internationalization, Dr Wong said opportunities for offshore RMB would increase due to shifting geopolitics. The currency is enjoying a rising share in trade finance and foreign exchange transactions across the world, from the Middle East to South America. Going forward, he said Hong Kong, as a natural destination for offshore RMB liquidity, should work to create more products and actively seek out RMB investment.
Summing up Hong Kong’s position as an IFC, Yue said the city’s ecosystem has remained unchanged but its reputation has taken a hit, which can be countered by spreading good and real stories to the world and bringing people in. “Seeing is believing,” he said, sharing the example of the Global Financial Leaders’ Investment Summit held in November, when international C-suite executives went back with glowing reviews of Hong Kong.
New and Traditional Economic Drivers
Despite just a few years ago being labelled a cultural desert, Hong Kong’s creative industries are rapidly developing, and today account for about 5% of Hong Kong’s GDP and 6% of employment. Presenting the vision behind the West Kowloon Cultural District, Betty Fung, Chief Executive Officer, West Kowloon Cultural District Authority, noted that the city offers the best of Western and Eastern cultures. “WKCD demonstrates the Government’s commitment to investing in cultural infrastructure,” she said. “Ten years ago, we were not regarded as a cultural hub. Today, there has been a paradigm shift.”
The figures say it all. As of 21 May this year, M+, which is ranked 18th in the world’s top 100 museums (Art Newspaper, 2023), saw over 3.5 million visits year since it opened its doors in November 2021, while the Hong Kong Palace Museum has had nearly 1.1 million visits since its launch in July 2022.
Art trading has also seen a transformation. “In 2017, total value of art trade in Hong Kong was HK$17.3 billion, when Hong Kong was ranked third in the world after New York and London. By 2021, it was HK$66.6 billion, a nearly three-fold increase,” said Fung. “Today, Hong Kong is the world’s second-largest art trading centre. The cultural and creative industries are helping us project soft power to the world.”
Discussing the economic contribution of tourism as a traditional pillar industry, YK Pang, Deputy Managing Director and Chairman of Hong Kong, Jardine Matheson Holdings Limited, said the sector accounts for 4.5% of GDP and employs 800,000 people, with a quarter of the city’s F&B sales and a third of retail sales generated by tourists.
Tourism can play a significant part in promoting opportunities in the GBA, and serves as a two-way street, Pang noted. While Hong Kong is a base for short trips to Mainland GBA cities for international tourists, the GBA’s 70 million people comprise a significant slice of travellers coming to Hong Kong. He added that the Hong Kong Tourism Board is focusing on MICE events which attract high-value visitors, and is deploying KOLs, especially in Japan and the U.S., to spread the word about Hong Kong.
Another potential economic driver is medical services. According to Anthony Wu, Chairman, Global Medical Group Limited, while Hong Kong is home to excellent researchers and scientists, it has long been in need of a regulatory framework and independent platform, such as the United States’ Food & Drug Administration. He said establishing such a body would help to register local innovations, while dovetailing with the city’s pursuit of innovation and growth. As a means of diversification, Wu said Hong Kong could work to actively promote its medical services and specialists as medical tourism was an untapped market.
Discussing Hong Kong’s role as a competitive onshore and offshore trade hub, Heiwai Tang, Director, Asia Global Institute, HKU, said globalization had become more regionalized and Asia-centric. He pointed out that though Hong Kong’s container port had slipped in world rankings, the airport remains the busiest globally in terms of cargo trade – even during the pandemic.
Looking ahead, Tang stressed that Hong Kong must grasp the opportunities arising from trends. “With restructuring of trade networks, there should be more opportunities for firms here to manage global supply chains and provide professional services, such as insurance and finance, especially for offshore trade. To remain an international trade hub, the sector must also embrace digital technologies.”
Highlights of Chief Executive’s Keynote Address
In an inspiring address, Chief Executive John Lee said the Summit provided a good starting point for a discussion on Hong Kong’s role as an IFC and new drivers of economic growth, as well as portraying the city’s path of development.
“Hong Kong always bounces back,” Lee said. “The hustle and bustle have finally returned to the streets, which are filled with business travellers and tourists. Thanks to the launch of the Government’s promotional campaign ‘Happy Hong Kong,’ I am glad to see everyone is smiling from ear to ear.”
He noted Hong Kong’s GDP growth of 2.7% in the first quarter of 2023 ended four quarters of decline. Retail spending surged by 24%, while the unemployment rate dipped to 3.1% amid the revival of domestic economic activity and inbound tourism.
Lee pointed out that central to Hong Kong’s success is its advantage under One Country Two Systems, with President Xi Jinping tying the long-term prosperity and stability of Hong Kong and Macao to the development of a great China.
“We must embrace rapid development posed by technological advancement, with our rich history of innovation and entrepreneurship,” he said, adding that the Government is supporting the budding fields of innovation and tech, as well as arts and culture, which are a testament to the strength and diversity of Hong Kong’s economy.
Lee also invited the audience to play a part in telling good stories about Hong Kong to the world, and to let the international community know “We mean business.”
Highlights of Financial Secretary’s Keynote Address
Finance chief Paul Chan gave an insightful speech on the economic situation in the world and Hong Kong, noting that the IMF further revised downward the global economic growth to 2.8% from 3.4% earlier, as geopolitical issues continue to contribute to high inflation in the West. Hong Kong’s GDP growth, which racked up 2.7% in the first quarter, is forecast to end the whole year at 3.5% to 5.5%.
With the pandemic under control, removal of all restrictions and social distancing, and tourists returning, export of services saw a very strong rebound, benefiting from international and Mainland tourist arrivals, while private consumption rebounded strongly in double digits, with another round of consumption vouchers handed out.
Chan also spoke at length on the Government’s “Happy Hong Kong” campaign, stressing that after three difficult years, while economic growth is important, it is equally important that there are smiles all around. He appealed to the audience to participate in the campaign and share positive energy in the community.
For the remainder of this term, he said the Government would focus on development. Referring to the 20th National Congress of the CCP in October 2022 and the Two Sessions 2023 in March this year, Chan said the key message is to pursue high-quality development through self-reliance in science and technology, and boosting green transition.
Hong Kong must also work to develop its digital economy, capitalize on Web3 opportunities, and solidify its position as a leader in green tech and green finance. Regarding attracting more professionals to our shores, he said the response to the Government’s talent schemes has been overwhelming: since December 2022, over 60,000 applications have been received, with more than half receiving approval. The Government also significantly expanded the eligible categories of its talent list from 13 professions to 51 to tackle labour shortages across many sectors.
We would like to thank all speakers and guests who attended and helped to make the summit such a success, especially the 15 HKGCC companies who sponsored the summit, namely: Platinum Sponsors: CLP Holdings Limited; Jardine Matheson Limited; and Sino Group. And Gold Sponsors: Bank of China (Hong Kong) Limited; Chevalier Group; CK Group; Ernst & Young Group Limited; The Hongkong Shanghai Banking Corporation Limited; Mayer Brown; MTR Corporation; NWS Holdings Limited; Sun Hung Kai Properties; Swire Pacific Limited; Wheelock and Company Limited; and Yue Hwa Chinese Products Emporium Limited.