Over the previous 25 years, since its return to the motherland, Hong Kong, as a particular administrative area of China, has remained probably the most dynamic cities on the planet. In the meantime, China’s decades-long drive for reform and opening up has stridden ahead into the brand new period.
Because the nation opens its door wider, Hong Kong will see its place and position develop stronger reasonably than diminish, stated Chinese language President Xi Jinping in 2018.
Xi stated he hopes Hong Kong will proceed to take the lead in attracting capital, know-how and expertise for a high-quality improvement of the nationwide financial system and the brand new spherical of high-level opening up.
Particularly, Hong Kong ought to leverage its intensive worldwide connections and complex skilled providers on the one hand, and depend on the mainland’s big market, full industrial system and technological competitiveness on the opposite, he stated, calling on town to change into the beachhead in China’s two-way opening-up.
Hong Kong’s strengths
On July 1, 1997, China resumed the train of sovereignty over Hong Kong, and the Hong Kong Particular Administrative Area (HKSAR) was established. Since then, it has been operating underneath the precept of “One Nation, Two Techniques,” which stipulates that the primary physique of China adheres to the socialist system whereas capitalist system is retained within the particular administrative area.
Addressing a gathering marking Hong Kong’s twentieth return anniversary in 2017, Xi stated, “‘One Nation’ is just like the roots of a tree. For a tree to develop tall and luxuriant, its roots should run deep and robust.”
On the premise of “One Nation,” “Two Techniques” ought to and have each cause to remain in concord and reinforce one another, he stated, including, “We should each adhere to the ‘One Nation’ precept and respect the variations of the ‘Two Techniques.'”
Then a yr later in 2018, in a speech to have fun the fortieth anniversary of China’s reform and opening up – “a vital transfer in making China what it’s right now,” Xi stated that the “One Nation, Two Techniques” precept is the “greatest power” of Hong Kong, and that the nation’s reform and opening up set the broadest stage for the event of Hong Kong.
For one factor, because of the “One Nation, Two Techniques,” the mainland has all the time been backing Hong Kong, particularly in instances of exterior disaster. That’s the reason town has weathered such challenges because the 1997 Asian monetary disaster, the 2003 SARS epidemic, the 2008 world monetary disaster, and at the moment the COVID-19 pandemic.
For one more, the Fundamental Legislation of the HKSAR protects personal property and overseas funding, supplies that Hong Kong shall not be topic to overseas change management, maintains its standing as a free port, and ensures the free motion of products, property and capital in Hong Kong.
Hong Kong has been the world’s freest financial system, in line with the Fraser Institute. And town has maintained the respect since 1997. Within the Fraser Institute’s Financial Freedom of the World 2021 Annual Report, Hong Kong continues to be ranked first in “Freedom to Commerce Internationally” and “Regulation” amongst 5 areas of evaluation.
Hong Kong’s position in RMB internationalization, BRI
In July 2019, China introduced 11 measures within the monetary sector to additional advance opening up within the precept of taking actions “quicker reasonably than slower and sooner reasonably than later.”
As a world monetary hub and a bridge for the nation’s two-way opening up – bringing in overseas funding and going world, Hong Kong’s position of being a testing floor for the nation’s monetary opening up has change into more and more outstanding, in line with monetary professionals in Hong Kong.
In a analysis report launched in March 2021, the Hong Kong Exchanges and Clearing Restricted stated that over time, Hong Kong has been constantly enhancing its monetary infrastructure, corresponding to by introducing new programs to facilitate banks from all around the world to make renminbi (RMB) funds by the Hong Kong platform.
On the finish of 2019, there have been 204 banks collaborating instantly within the RMB real-time gross settlement system, stated the report, citing knowledge from Hong Kong Financial Authority (HKMA). And the typical day by day turnover by the system by July 2020 amounted to round 1 trillion yuan (about $149.53 billion), in line with the report.
Hong Kong is the world’s largest offshore RMB enterprise middle. In keeping with the newest knowledge from HKMA, the RMB deposit stability in Hong Kong was 841.9 billion yuan (about $125.85 billion) on the finish of April 2022, up by practically 133 instances from about 6.3 billion yuan (about $940 million) on the finish of Could 2004. Over 70 p.c of the world’s offshore RMB funds are dealt with in Hong Kong.
Hong Kong can be an vital service platform for Chinese language companies to go world and a key offshore capital-raising middle. As of April 2022, 1,370 mainland enterprises are listed in Hong Kong, accounting for 53.3 p.c of the overall variety of corporations listed on the Hong Kong Inventory Change and 77.7 p.c of the overall market capitalization.
Moreover, in the 14th 5-Yr Plan (2021-2025) define, China states that it’s going to help the HKSAR to strengthen its standing as a world offshore RMB enterprise hub and again its becoming a member of into the constructing of the Belt and Highway Initiative (BRI), a key half within the new sample of China’s all-round opening up.
Noting that Hong Kong performs a big position in RMB internationalization, Yi Gang, governor of the Folks’s Financial institution of China, the nation’s central financial institution, stated in December 2021 that Hong Kong may broaden the record of RMB-denominated property by constructing on the present Inventory Join, Bond Join, and Wealth Administration Join between Hong Kong and the mainland.
Yi added that Hong Kong can present better help to the monetary connectivity underneath the BRI.
“Because the gateway for mainland corporations to go world, Hong Kong can enhance monetary providers to raised help these corporations’ engagement within the BRI,” he stated. “As the worldwide asset administration hub, Hong Kong can even appeal to extra worldwide buyers within the joint improvement of the BRI.”