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Hong Kong must prepare for a China fully open to the world

Debate throws spotlight on the future challenges facing Hong Kong and how it must adapt amid the inevitable competition from mainland cities

PUBLISHED : Saturday, 17 August, 2013, 12:00am
UPDATED : Saturday, 17 August, 2013, 3:53am

Hong Kong must prepare for the day when China opens fully to the world, changing forever the city's traditional role as a gateway to the Middle Kingdom, a senior Hong Kong government official says.

Secretary for Financial Services and the Treasury Professor Chan Ka-keung told a seminar organised by the South China Morning Post that the city needed to catch up to the changing circumstances on the mainland as its economic development reached a new level.

"China will be eventually completely open. Hong Kong's ability to grow as the unique gateway when China is closed - that day will sooner or later be over," Chan told the audience at the "Redefining Hong Kong" seminar at the JW Marriott hotel.

Chan was one of five panellists debating the question of "The role of Hong Kong as the Ever-Evolving Gateway to and for China" at the seminar, moderated by the Post's financial services editor, George Chen.

"We should not be afraid … The more open China is, even though that means more competitions from other Chinese cities, it will provide Hong Kong with more opportunities," Chan said.

"The opening up of China in the past 30 years has brought Hong Kong more opportunities, not fewer," he said.

The city has enjoyed spectacular success as the closest international capital market to China and taken advantage of its plentiful supply of professionals and effective, clean legal system.

Now, it acts as another sort of gateway, as a testing ground for new policies, such as the internationalisation of the yuan and capital market reform.

But doubts have grown in recent years about how it can stay ahead of the game when the nation is fully opened up and its currency fully convertible.

"Hong Kong's gateway role has always been changing," Chan said, adding that the city should eventually be "a gateway to provide the best services" when the mainland is fully open. But fellow panelist Vincent Lo Hong-shui, chairman of Shui On Group, took a more pessimistic view, pointing to the rising threat of competition from mainland cities. He said the political situation was his biggest concern for the future of Hong Kong.

"The cities in China have really moved up quite a bit. In the past, I think they really looked up to Hong Kong, but now I think they don't," Lo said, adding that Hong Kong people should not continue to "behave in a superior way".

As well as identifying Shanghai as host of the mainland's first free-trade zone, Beijing has designated several experimental economic zones to act as testing grounds for new policies.

For example, the central government in June last year designated Qianhai, a 15-square-kilometre site in western Shenzhen, as a testing ground for the removal of capital controls. It has visions of turning the site, an hour's drive from Hong Kong, into the "Manhattan of the Pearl River Delta" with a gross domestic product reaching 150 billion yuan (HK$188 billion) by 2020.

Benjamin Hung Pi-cheng, executive director and CEO of Standard Chartered Bank (Hong Kong), is more optimistic. He points to the potential opportunities from the internationalisation of the yuan. "Hong Kong has never been in a better position" in the past three or four decades, Hung said, adding that Beijing's determination to globalise its currency would bring huge opportunities for the city.

Albert Ng, regional managing partner at Ernst & Young, also said "opportunities are even greater than in the past", and said that recent financial scandals on the mainland, which have affected investor confidence in mainland firms, would not stop the city attracting mainland businesses to list in Hong Kong.

John Slosar, chief executive at Cathay Pacific, said the growing appetite for travel as a result of the accumulation of wealth on the mainland would be one of the biggest game-changers for the aviation industry in the coming years. Just 15 million outbound trips are made from the mainland every year now, a figure that would grow to 200 million by 2030, he said.



Q: Is there anything stopping you building another Xintiandi (an urban shopping and entertainment attraction built by Shui On in a historic district of Shanghai and later repeated in other mainland cities) in Hong Kong?

Vincent Lo: Our first [Hong Kong] chief executive Tung Chee-hwa also mentioned that to me when he visited Xintiandi in Shanghai. I said we didn't have old buildings. We have torn down everything.

John Slosar: A great city that attracts people, that has character, tends to have an interesting, diversified, attractive restaurant district, where people go in the evening.

Vincent Lo: Allan Zeman [of Lan Kwai Fong Holdings] might disagree with you. Every time I see him I would say Lan Kwai Fong is so ugly. He would say, "Vincent, yours is very beautiful, but I have all the beautiful people".

Q: If you could make one suggestion to the government, what would it be?

Albert Ng: Hong Kong only has a small population and small market. If we are able to allow Hong Kong accountants to practise in China, that would open up a lot of opportunities.

Vincent Lo: Hong Kong people were trained to have many superiors. But things have moved on.

Q: What is the first thing that comes to mind when people ask you why you like Hong Kong?

Albert Ng: I call Hong Kong home

Benjamin Hung: Banks work here.

John Slosar: We don't have oil, natural gas, minerals … what we do have is the energy and resources of all Hong Kong people, which enable us to adapt to the changing environment.

Professor Chan Ka-keung: The great city lifestyle.

Vincent Lo: We in Hong Kong are enjoying great opportunities because of the transformation in China. 



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This article is now closed to comments

Yet again, all talk about opportunities for profit, but no mention of our social infrastructure. What about making our home a nicer place in which to live? Vincent Lo is right about one thing: most of HK's built environment is ugly. Yes, we have some beautiful and impressive skyscrapers, but we also have thousands of acres of cheaply built and badly maintained old buildings. What about improving HK's sucky quality of life so that our brightest and best choose to stay and work here instead of going overseas? What about turning HK into a place where the brightest and best from around the world want to come and make their lives? It isn't only about the money. It really isn't. Who, given a choice, would choose to bring up a family here? Even those who can afford international schools or overseas boarding schools think twice about it.
HK does indeed face many challenges, but responding to them in the usual one-dimensional, show-me-the-money way will only make our problems/challenges bigger. Could our "leaders" try to lift up their eyes and see the bigger picture, please?
HK has the advantage now. To remain so requires (at least) two things which the Mainland will have a difficult time (or at least a time lag) imitating.
First is the English Language, which it seems government is abandoning - officials often don't give English statements to the press, and support for English in the schools is slowly eroding. This is a HUGE advantage on the international stage... it can't be emphasized enough.
Next is the independent and transparent judicial system that was left in place when the British made their exit. Any degradation in the courts it will spell trouble for the situation here. The west now trusts Hong Kong.
Both of these items give the west a comfort zone that they will readily embrace as the mainland struggles with a lack of trust from the west. The ability to deal with the west when the mainland couldn't (for legal reasons) has been HK's main advantage. Now that the legal issues are disappearing little by little, these advantages should be maintained and even improved.
Sorry panelists, but it was again the same old story; a lot of talk, but no one really said nothing. There's no point of having these fancy panels with ah-so-important-topics if the so-called experts are just beating around the bushes.
It is obvious that sooner or later China will pass HK in terms of business opportunities combined with good infrastructure for global business. The only thing that can multinationals, and therefore talented people, in HK is the quality if living. At the moment it's way below the international standards. Sure HK is a FUNNY place to live, it's like an amusement park for adults, but so is Shanghai. People decide where the business goes. If the city is a good place for their family, especially for their children, they will go there.
HK needs to invest in green technology. Get some hybrid/electric cars as taxis (I think we're getting there). The greener electricity (no coal plant), gas or hybrid buses, parks and other green places (on rooftops of the buildings). HK has all the possibilities to be the example for the rest of the world.
That would attract highly educated people (and their businesses) to HK instead of mainland or anywhere else in Asia. The higher the education, the more you care about your surroundings and your personal (and your family's) health.
By the way, banks are just horrible in Hong Kong. If you ever haven't tried a real and working banking system, go Finland or Sweden.
such a trivial question.. wont loose sleep over it.. before being a completely open economy a lot have to change, e.g. political climate and changes which for a foreseeable future 20/30 yrs for that to happen at all..
The grave problem for Hong Kong is that it is not really an open economy. That is not to say it will not forever -- it depends on change and reform.
It is pretty witty how Allan Zeman defended his Lan Kwan Fong that he has all the beautiful people over Vincent Lo’s remark of the place being ugly. Both of these gentlemen possess foresight and entrepreneurship, Hong Kong and China benefitted from them.

The issue how Hong Kong is to response to its loss of being a gateway to China for the rest of the world, the best way is ironically is not blindly upholding the Basic Law in unchange Hong Kong for 50 years. The reality is that waiting for the colonial generated Hong Kong citizens all die out to turn Hong Kong to a new leaf is impractical. By then, Hong Kong may have become irrelevant to the world including China. The generations of the HKSR shall bear the most effort to face as well as create the transformation of Hong Kong. I don’t see many of the older generation is contributing much.
Awesome drawing!


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