How Hong Kong should position itself in 13th Five-Year Plan

November 09, 2015 16:27
The Shanghai-Hong Kong Stock Connect further enhanced the city's role as a platform in attracting global investors into China. Photo: Bloomberg

Five years ago, Hong Kong's financial sector anxiously waited for Beijing to unveil its 12th Five-Year Plan, and hoped it would bring new opportunities.

Hong Kong has always played a key role in trading and services, helping the mainland attract investment and conduct trade using the city’s financial strength.

The city offers a comprehensive financial service platform to cope with mainland’s “going out” and “bringing in” strategies.

During the last five years, the mainland market has become a vital part of the city’s financial sector, and Hong Kong has transformed itself into a global platform, connecting the mainland and the global market.

Professionals and connections are critical in the financial market. Hong Kong should accelerate its growth by leveraging on China’s rising economic power.

The launch of the Shanghai-Hong Kong Stock Connect and mutual fund recognition programs have further enhanced the integration of both markets and opened the door for global investors to access the Chinese market.

Hong Kong’s financial sector will maintain its robust growth during the 13th five-year period, and further cement its ties with the mainland market.

As an export-oriented economy, Hong Kong relies on the mainland to develop its economy.

It lacks medium- and long-term plans, and allows market forces to take full control.

The government engages in short-term planning, as reflected in the annual policy address and budget, to manage the macro economy.

It lacks a long-term action plan to deal with a series of issues.

However, Hong Kong is in the middle of the historic era of China’s economic takeoff. China aims to build a moderately prosperous society by 2020. How should Hong Kong tap into that?

During the next five years, Hong Kong should further leverage on its strength and attain a more vibrant economy.

As early as May last year, the National Development and Reform Commission, the nation’s top economic planning body, kicked off preparatory research for the 13th Five-Year Plan.

It pledged to support Hong Kong in its bid to cement its role as a global financial, trading and shipping center.

Hong Kong has a special role to play in Beijing’s “One Belt, One Road” strategy during the 13th five-year period, according to the fifth plenary session of the 18th CPC Central Committee.

Hong Kong has to act as a “super-connector” between China and other parts of the world to give full play to its “one country, two systems” advantage.

I believe the “One Belt, One Road" strategy will achieve a breakthrough during the 13th five-year period.

Hong Kong should grasp the opportunity by using its strength in finance, trading and professional services.

The city remains a key capital-raising platform for mainland companies. It can help these companies obtain global capital to explore markets along the “One Belt ,One Road” route.

Meanwhile, Hong Kong can assist China to accelerate integration with other countries along the route, and serve as an intermediary in developing Southeast Asian markets.

The Asian Infrastructure Investment Bank is a key part of that strategy, and Hong Kong should play a key role by developing syndicated loan, debt financing, equity financing and offshore renminbi services.

This article appeared in the Hong Kong Economic Journal on Nov. 9.

Translation by Julie Zhu

[Chinese version中文版]

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Senior investment banker