Hong Kong can attract foreign technologies and investments by acting as a 'super connector', leveraging the advantages of 'one country' and 'two systems', according to Chief Executive Leung Chun-ying in his January 2016 Policy Address. We take a look at why Hong Kong is well-suited for this role.
The One Belt, One road (Belt and Road) initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road; and the aim to promote economic cooperation with countries along the proposed Belt and Road routes.
According to the Chief Executive Leung Chun-ying in his January 2016 Policy Address, the initiative will help power the future for Hong Kong, China and more than 60 economies along its linked corridors. Key characteristics include an economic policy of free enterprise and free trade, the rule of law, a well-educated workforce, sophisticated commercial infrastructure as well as a seaport and an airport.
A financial management hub
Hong Kong's geographic position makes it an ideal link between China and the rest of the world. It is a regional leader in a knowledge-based economy, well connected with entrepreneurs to support an outward-looking internationally minded population.
At the China Daily Asia Leadership Roundtable in 2009, the Chief Executive explained that Hong Kong can help set the Belt and Road in motion. Its high degree of openness and recognition as one of the world's freest economies has helped maintain a reputable standing and valuable international connections.
Hong Kong has the expertise, capacity and connections to serve as the fund-raising and financial management hub for the Belt and Road. It is more than China's international financial centre; it is also one of the world's financial capitals and the seventh largest stock market in terms of market capitalisation. Globally, it ranks second in equity funds raised through initial public offerings.
The government is also looking to issue its third sukuk (Islamic bonds) and become an Islamic bond centre to meet the financing needs of the Islamic markets.
Increase of Chinese enterprises
In recent years, the number of Chinese enterprises in Hong Kong has increased significantly, which reaffirms the city's unique role as 'the major springboard' for Chinese companies to expand overseas.
Data released by the government last October, illustrates Hong Kong's position as an international financial hub in the world, with growth among financing and banking companies in the last five years. The number of business operating in Hong Kong with parent companies overseas and in the mainland climbed to a new record of 7,904 in 2015, an increase of 4.2% compared to the previous year. Combined, these 7,904 companies have already employed about 422,000 people, which is a 4.3% increase compared to 2014.
Also in a five-year period, the number of businesses with parent companies located in China, and companies engaged in the financing and banking sector saw even more growth, both increasing by 36% from 805 and 1,059 respectively in 2011.
Government support for financial technology (Fintech) start-ups has been growing as the sector compliments the city's strength in financial services and existing talent pool. In April 2015, the Hong Kong government created the Steering Group on Financial Technologies; and plans for the first Innovation and Technology Bureau were also mapped. The Chief Executive also announced a HK$2 billion fund to boost investment in innovation and technology during his policy address in January.
Cybersecurity, block chain, e-payments, robotics, Internet of Things (IoT) and regulatory technology will be among top niche industries being targeted as Hong Kong looks for greater recognition as a Fintech hub.
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