Hong Kong should seize the opportunity of becoming a fund-raising platform for China’s “One Belt, One Road” initiative, which will require up to 100 trillion yuan (US$16.1 trillion) in capital by 2040, a member of a government advisory body said.
Qin Xiao, convenor of the mainland opportunities committee of the Financial Services Development Council, told the Hong Kong Economic Journal that massive funds would be needed to implement the investment and infrastructure program, which seeks to link China with Central Asia, the Middle East and Europe.
However, the rate of investment in the regions covered by the plan has decelerated to 28.1 percent of China’s GDP in 2013 from 29.5 percent in 1992, Qin said.
Funds are needed to be raised from international financial centers such as Hong Kong, London and New York, as there would not be enough in the region, he said.
China’s government has set up the Asian Infrastructure Investment Bank and the Silk Road infrastructure fund to push forward the One Belt, One Road program.
Meanwhile, some 500 billion to 600 billion yuan will flow out of the country in the event that the renminbi is added to the Special Drawing Rights basket of the International Monetary Fund, Qin said.
Hong Kong requires 6 trillion yuan in deposits by 2028 to cater for the demand for the Chinese currency.
By that time, the total amount of offshore yuan savings is expected to be 11 trillion yuan, which is about one-third of all offshore US dollars, Qin said.
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