British minister sees no quick fix for Hong Kong
Hong Kong is not out of the woods yet and is facing tough economic challenges in the short term given weak global demand, British minister for trade and investment Mervyn Davies said yesterday.
Time was needed to allow the unprecedented economic stimulus measures implemented around the world to take effect, Lord Davies said, despite US President Barack Obama's comment this week that he saw signs of hope for the United States' economy.
Lord Davies would not predict when consumers might start to regain their confidence.
'I think you have to give the measures time. What everybody has found is that there are no quick fixes to this problem,' the former Standard Chartered Bank chairman said on a visit to Hong Kong. 'What I would say is that, at some stage, consumer confidence will be restored.'
He described the crisis as 'a huge economic shock' and 'a sudden jolt to global demand'. Hong Kong, as an open market, was exposed to a worldwide problem that had shown up weaknesses in certain economies, and needed to evolve with the rest of the world, he said.
Lord Davies is on a two-day visit to the city during which he will meet Chief Executive Donald Tsang Yam-kuen and key investors including billionaire tycoon Li Ka-shing.
He also looked to the city's future. 'I see, in the next 10 years, closer and closer integration with the Pearl River Delta as being critical. I think Hong Kong will have to become a leader in the creative industries and will have to become a leader in environmentally friendly green industries. I think that's where the future is,' he said.
'There are huge opportunities for Hong Kong in the creative industries space and in the green environmental space. That is because, as it integrates more and more with the Pearl River Delta - with that huge population - there will be a need for those two qualities.'
Lord Davies was formerly a member of the chief executive's taskforce for tackling the crisis that this month highlighted six service industries for development in the medium and long term: testing, medical services, innovation, creative services, environmental services and education.
Lord Davies said: 'Hong Kong is a place that very quickly looks at its position and says, 'Wow, we need to do this.' Things like the development of West Kowloon, becoming a leader in green environmental issues, developing and expanding its relationship with Guangdong province - I see these as natural developments.'
Lord Davies said Hong Kong would remain an important centre for financial services. He played down fears of a competitive threat from Shanghai, which the central government recently backed to become an international financial centre by 2020 and a shipping hub.
However, he said the debacle over the bankruptcy of US investment bank Lehman Brothers had taught the industry many lessons. Standard Chartered is one of the banks that sold derivatives, such as minibonds, issued or guaranteed by Lehman Brothers which lost much of their value with its collapse.
Although he backed Hong Kong's financial regulatory regime, he criticised the recent behaviour of some lawmakers in the Legislative Council as bad for the city's image.
'The standards of behaviour need to be such that, when the rest of the world is looking at Legco, standards of behaviour are what we would expect of a high-quality institution. When it's not, it reflects badly on Hong Kong as a brand,' he said.
