The "Belt and Road" initiative has attracted significant attention and strong resonance both domestically and across relevant countries, regions, and the entire world. The reason for such a tremendous impact lies in the profound significance and infinite opportunities embedded within this grand vision. As a financial center, trade hub, and shipping nexus, Hong Kong can leverage its unique advantages in the national promotion of "Belt and Road" development, thereby gaining greater opportunities for growth.
Professor Chen Zhangxi of the Institute of Hong Kong and Macao Economy at Jinan University:Strengthening Financial Functions
Since the reform and opening-up, Hong Kong has consistently been the most important international financial center in Asia and one of the most significant globally. Centered on this function, Hong Kong has gradually built a comprehensive financial system, specialized financial division of labor, transparent and standardized financial products, and complete financial infrastructure, forming robust capabilities in financial information aggregation, financial R&D, and a financial talent cultivation system.
Currently, Hong Kong is the largest offshore Renminbi (RMB) center. By the end of 2014, the cumulative balance of offshore RMB deposits exceeded 2 trillion yuan, with 1.16 trillion yuan held in Hong Kong. In 2014, cross-border RMB payments and receipts between Hong Kong and the mainland accounted for 52.7% of all overseas regions, and its share in SWIFT international payment currencies was 69%. Over the next 10 years, Hong Kong will continue to hold an absolute dominant position in offshore RMB business. The scale of Hong Kong's securities market ranks among the top in the world; by the end of 2014, the market capitalization of the Hong Kong Stock Exchange was 3.23 trillion USD, ranking seventh in the global stock market. The regulated operation of the securities market has laid the foundation for the stable development of Hong Kong's securities market.
Therefore, Hong Kong can leverage its financial advantages under the "Belt and Road" strategy: First, act as a financing platform. By utilizing the diversification advantages of the financial market, it can gather clients from various fields at the global capital market level to provide different types of funding, such as loans, bonds, and equity, for the "Belt and Road" to meet the diverse capital needs of different clients. It can issue "Belt and Road" bond financing globally, strengthen cooperation with international and domestic financial institutions, and fulfill the functions of an investment bank. Second, play a leading role. Building on Hong Kong's lead in the offshore RMB market and based on existing liquidity management foundations, it can improve multi-level liquidity support mechanisms to provide a more stable interest rate basis for the development of interest rate risk hedging, interest rate swaps, and floating-rate products for global offshore markets. It can develop RMB-related derivative products, promote the development of RMB-denominated stocks and bonds, launch more RMB-denominated commodity futures products, and strengthen the risk hedging, investment, and financing functions of the offshore RMB market. Third, promote the internationalization process. Through international cooperation, it can enhance the status of the RMB as a regional trade settlement currency through industrial cooperation and trade exchanges. By using syndicated loans and bond issuance, it can promote the circulation and cross-border flow of RMB funds in the Hong Kong offshore RMB market while providing RMB financing for "Belt and Road" infrastructure projects. Utilizing the national strategy of the "Belt and Road," it can strengthen cooperation with other major international financial centers, increase the proportion of RMB usage in trade financing, project investment, and cross-border loans, and advance the internationalization of the RMB.
Wang Chunxin, Senior Economist at Bank of China (Hong Kong):Building a World-Class Metropolis
In the process of the nation promoting "Belt and Road" construction, Hong Kong can leverage its unique advantages to act as a provider of offshore strategic support and assistance, thereby gaining greater business opportunities and further building itself into a world-class metropolis. Specifically:
First, actively participate in investment and management along the Silk Road, and develop Hong Kong into a world-class investment and management base. Currently, Hong Kong is a premier investment and management center in the Asia-Pacific region. The "World Investment Report 2015" published by the United Nations Conference on Trade and Development shows that Hong Kong's outward foreign direct investment outflows surged by more than 70% to 143 billion USD last year, ranking second globally, only behind the United States, reflecting Hong Kong's role as a "super-connector" and a direct investment conduit. The strong growth in infrastructure and industrial investment along the Silk Road provides Hong Kong with opportunities to participate in development. Hong Kong enterprises can participate in "Belt and Road" investment and construction through various means. Foreign investors will increasingly use Hong Kong as a base to enter the mainland and other markets along the Silk Road, and mainland enterprises will increasingly use Hong Kong for regional mergers, acquisitions, and investment activities.
Second, promote trade development along the Silk Road and build Hong Kong into a global trade and supply chain management platform. Currently, the Asian market is the primary export destination and import source for Hong Kong's international trade center, accounting for 77% of Hong Kong's total external commodity trade. The "Belt and Road" construction will increase opportunities for Hong Kong's cargo transshipment or transit, offshore trade, and service exports, and trade support services such as business negotiations, exhibitions, and brand promotion will also increase significantly. More importantly, Hong Kong will have the opportunity to strengthen trade transformation and further enhance supply chain management business, leveraging the opportunities provided by the "Belt and Road" to build Hong Kong into an important platform for global trade and supply chain management.
Third, provide internationalized financing services for "Belt and Road" construction and elevate Hong Kong into a world-class financial center. In the national "Belt and Road" construction, Hong Kong's financial industry possesses huge advantages and conditions to provide multi-functional services and multi-faceted support, including superior geographical location and the dual advantage of "one country, two systems"; as an international financial center, it has comparative advantages in diversified financial services such as financing; as the largest offshore RMB business center, it has a head start in the RMB internationalization process, and most future overseas RMB financing will be conducted in Hong Kong; it also possesses a complete legal system, low tax rates, and a simple tax system.
Fourth, support mainland enterprises in investing in Silk Road countries and build Hong Kong into an offshore operations center for Chinese enterprises. Hong Kong has always been the location for regional headquarters of multinational corporations in the Asia-Pacific region. Currently, there are about 4,000 regional headquarters and offices operating in Hong Kong, many of which are Chinese-funded enterprises. The nation strongly encourages and promotes mainland enterprises to "go global" and will create an investment environment favorable to Chinese-funded enterprises in surrounding countries and regions through "Belt and Road" construction. In the future, more Chinese-funded enterprises will use Hong Kong as a springboard to go global, first establishing investment institutions in Hong Kong and then investing and developing in Silk Road countries as Hong Kong enterprises.
Fifth, provide standardized professional services for Silk Road construction and develop Hong Kong into a world-class professional services center. Professional services including accounting, legal, consulting, engineering technology, etc., as well as other business support services, have always been Hong Kong's strengths, bringing over 30 billion USD in value-added to Hong Kong annually, and can play a special role in the national "Belt and Road" construction in the future.