Hong Kong’s closer economic ties with China and the opening up of the mainland are not a threat to its future, Hong Kong Monetary Authority (HKMA) chief executive Norman Chan said.
The notion that Hong Kong will face greater risk if it continues to develop closer ties with the mainland is based on the assumption that it will lose its uniqueness as a Chinese city and ultimately its competitiveness, Chan wrote on the HKMA website Monday.
Also, mainland China has yet to open up its capital account which has caused difficulties for cross-border money movement, forcing many international companies to use Hong Kong as an intermediary.
This has given rise to the perception that Hong Kong is living on borrowed time, he said.
If domestic financial centers such as Shanghai, Tianjin, Beijing, Shenzhen and Guangzhou can directly trade with other markets, there would be no room for Hong Kong, Chan said, citing some critics.
“Hong Kong people must not be complacent or defeatist. Indeed, we must not be swayed by views that are not supported by empirical evidence or objective analysis,” he said.
China is the world’s second largest economy, with its gross domestic product hitting US$9 trillion or more last year. The economy is expected to maintain an annual growth rate of 7 percent.
“China today is no longer the same as the China in the 1980s or 1990s. In fact, China, with its sustained growth, is now the engine of world economic growth and an important factor for global financial stability,” Chan said.
It’s “necessary as well as natural” for Hong Kong to enhance its ties with all Chinese provinces in terms of commerce, investment and culture, he said.
“New York is the largest metropolis in the US, but if it cuts off all contact with other inland cities in the country, how could it have today’s achievements?”
In addition, Hong Kong’s competition with other mainland cities is not a zero-sum game. Instead, Hong Kong will benefit more if China opens more to the outside world, he said.
Chan said the mainland has been gradually liberalizing cross-border renminbi movement since 2009 by internationalizing the yuan, benefiting Hong Kong the most with its emergence as a leading offshore trading yuan center.
“The internationalization of renminbi is still in its early stages, and as it keeps moving towards full convertibility, combined with a further liberalisation of the mainland’s capital account, there is huge potential for further renminbi business in Hong Kong.”
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