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its links with the booming Chinese mainland and diversifying its own
economy, the city's chief executive said Wednesday. In particular,
the city can play a key role in Beijing's plans to promote the yuan
as an international currency, Donald Tsang said in his annual policy
address. He downplayed concerns that China's promotion of Shanghai
as a global trade centre threatened Hong Kong's traditional role as
an international gateway to the Chinese economy, saying the two
would work together. 'As the (yuan) moves towards
internationalisation, the mainland needs a highly open global
financial centre that is fully aligned with the world financial
markets to serve as its platform for foreign financial activities,'
Tsang said. 'Hong Kong can fit this role by making the best of
our advantages.' China has recently raised the issue of the US
dollar's status as the global reserve currency, taking advantage of
the recent financial crisis to promote international use of its own
unit. Tsang's speech outlined an array of initiatives aimed at
adjusting to the competition and opportunities presented by China's
growing global importance. He also sought to allay fears about a
property bubble raised recently by new record prices for luxury
apartments in Hong Kong, saying the government might consider
boosting land supply. His plans to promote the city as a
'bridgehead for mainland enterprises to go international' included
strengthening services in areas such as stock market listing, bond
issuance and financial hedging. Addressing concerns Hong Kong
would lag Shanghai in financial development, Tsang said the two
cities should work together. 'I believe that Hong Kong can work in
collaboration with Shanghai and leverage our respective strengths to
contribute to the development of financial services in the
mainland,' he said. Shanghai's plans to promote itself as a major
hub for the two areas that Hong Kong has typically dominated—finance
and shipping— have put pressure on Hong Kong to develop other
businesses such as education, medicine and the creative and
environmental industries. China has said it will allow foreign
companies to sell shares on Shanghai's stock exchange for the first
time as part of a target to become a financial hub by 2020. Shanghai
is also aiming to become a full-service world-class shipping centre
by the same year. Economists said Tsang was right to focus on an
advantage Hong Kong has over Shanghai—its proximity to the Pearl
River Delta, a major regional economy and manufacturing base for
China. 'Traditionally Hong Kong has been used for regional
financial flows but this middle-man role will be eroded when Shanghai
becomes fully open,' said Kelvin Lau, regional economist at Standard
Chartered Bank. 'It needs to change from facilitating to serving a
much larger domestic market in the wider Pearl River Delta region.'
Tsang also pledged to 'foster economic cooperation with Taiwan' as
Hong Kong adapts to warmer cross-strait ties, which could hurt the
southern city's position as an intermediary between the two. On
the issue of rising real estate prices in Hong Kong, Tsang said the
government would closely monitor the situation in order to prevent
any potential market bubbles forming. Hong Kong's luxury
residential property market has jumped about 39.5 per cent so far
this year while the mass-market segment has risen 20 per cent,
according to real estate firm Savills. Tsang said the government
would when necessary 'fine-tune the land supply arrangements...with
a view to quickening the pace of bringing readily available
residential sites to the market'. It would also closely monitor
data on property transactions, negative equities, and mortgage
loans, to ensure that there was no sudden steep price fall, he added.
Critics were disappointed that Tsang's fifth policy address placed
less emphasis than last year's speech on helping the city's poorest.
More than 10 political and welfare groups protested outside the
Legislative Council before Tsang arrived to deliver his address,
calling for universal suffrage, a minimum wage and subsidies for the
poor and elderly. Tsang's speech was briefly interrupted by
lawmaker 'Long Hair' Leung Kwok-hung and two other members of the
League of Social Democrats waving placards and questioning whether
the address had anything new to offer.
