China’s bank regulator gives a vote of confidence to HK’s ‘vital and indispensable’ role as Asia’s financial hub

20-Jan-2021 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong has a vital and indispensable role to play in China to facilitate the economy’s so-called dual circulation development, as well as in the internationalisation of the yuan and the growth of the Greater Bay Area, said the country’s bank regulator. Hong Kong is “indispensable in many aspects” in China’s trade, investment, finance, legal, tourism and cultural activities, “so it is necessary for Hong Kong to further strengthen the cooperation and collaboration with the mainland,” said Guo Shuqing, chair of the China Banking and Insurance Regulatory Commission (CBIRC), in a keynote speech during the Asian Financial Forum (AFF).

“Hong Kong is vital to China’s new development pattern of dual circulation,” Guo said in his televised speech, delivered in English. “Hong Kong connects China’s domestic and international circulations.

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The speech by Guo, who undertook a year of study at the St Anthony’s College at Oxford University in the late 1980s, is the most recent affirmation of Hong Kong’s importance by a senior Chinese regulator, as the city grapples to assuage concerns that it is losing its edge to Chinese cities lie Shenzhen and to rival cities around Asia, all competing to serve as the windows to the world’s second-largest economy.

“We will provide greater market access to firms from Hong Kong to facilitate their development,” Guo said. “The Greater Bay Area will definitely become a model in our modernisation drive.”

The GBA is a cluster of 11 cities in southern China’s Guangdong province including Hong Kong and Macau that forms the nucleus of one of the world’s fastest-growing economic regions. With a combined population of 70 million people and an economy estimated at $1.65 trillion, the GBA will be the melting pot where three different currencies, economic and legal systems mix and mingle to lead the next phase of China’s economic growth.

The GBA, which includes Shenzhen, dubbed China’s Silicon Valley, will be the country’s scientific and innovation centre along with Beijing and Shanghai, Guo said. The Bank for International Settlements (BIS), dubbed the central bank to the world’s financial authorities, relaunched its Asian office in Hong Kong in 2019 by naming the city as one of its three innovation hubs alongside Basel and Singapore.

“Hong Kong and Shenzhen can support and benefit each other in digital economy, biomedicines and artificial intelligence,” Guo said.

Hong Kong, the world’s largest offshore trading centre for the renminbi, also plays a key role in the international adoption of the Chinese currency, Guo said.

“As an offshore financial centre, Hong Kong can better participate in China’s opening up, and can also steadily promote [the renminbi's] internationalisation,” Guo said, adding that China will further improve several of the Connect cross-border investment schemes between Hong Kong and the stock markets of Shanghai and Shenzhen. A bond connect scheme was introduced in 2017 to let foreign investors tap China’s bond market via Hong Kong.

All these enhancements in Hong Kong’s financial role are only possible after the passage of the National Security Law for Hong Kong by the Chinese legislature, which is needed to put an end to the city’s anti-government protests and maintain Hong Kong’s role as an international financial centre, Guo said.

“The National Security Law put an end to the violence and turmoil which were called ‘a beautiful sight to behold’ by some Western politicians,” Guo said. “It also dealt a heavy blow to anti-China forces and separatists. It provides a strong guarantee for social stability in Hong Kong.”

Guo also rejected the international negative remarks about China’s state capitalism.

“This is a big misunderstanding,” he said, as the private sector now accounts for 60 per cent of China’s economy and it has the widest range of industries in the world.

Its regulation has protected the interests of labour force, Guo said, a remark obviously to hit back on US and British on banning products import from China for alleged using forced labour.

By 2035, China will achieve what Marxist-Lennist politico-economic theorists call “socialist modernisation,” a status in development theory that translates to a moderately developed country in terms of per capita GDP, and a country with established rule of law, Guo said.

“It would be a huge disaster if China and other Asian countries reached modernisation in the same way as Europe, US and Japan,” he said. “Over-exploitation and an increasingly fragile environment have already sent out warning signals. In the past two decades, frequent infectious diseases were probably related to expanded human activities,” he said.

It is therefore China will develop its economy in a “green” way of using less energy and reduction of pollution.


Category: China

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