Interview: HK could be financing platform for "One Belt, One Road," says financial chief

Tsang Chun-wah, financial secretary of the Hong Kong Special Administrative Region (SAR) government, has revealed that Hong Kong should seize the golden opportunity of China's"One Belt, One Road"strategy in which Hong Kong could become a major financing platform. "The'One Belt, One Road' strategy is another golden opportunity for Hong Kong after the reform and opening up. If we could seize the opportunity, Hong Kong's economic growth could have a fundamental momentum in the upcoming 30 to 50 years,"Tsang said in an exclusive interview with Xinhua. "Look at what changes the reform and opening up has brought to Shenzhen and Hong Kong, you will understand why I regard the'One Belt, One Road' strategy as the potential gravity of Hong Kong's economic growth." "One Belt, One Road"is a development strategy and framework proposed by China's central authorities which focuses on connectivity and cooperation among countries in Eurasia. It mainly consists of two components: the land-based 'Silk Road Economic Belt' and oceangoing 'Maritime Silk Road,' both of which had prominent roles in the history of China's ancient communication with Eurasian countries.

WHY STRATEGY CRUCIAL TO HK

Tsang said among more than 60 countries along the belt and road, some emerging markets have no much differences from Shenzhen back to 30 years ago. If Hong Kong could take the opportunity and promote finance, trade, logistics, commercial professional services and tourism in those countries, its economy could achieve further leap.

Currently, trade and logistics contribute to about a quarter of Hong Kong's GDP growth, and finance accounts for about 16 percent with another 10 percent from professional services. Tsang believed that"One Belt, One Road"could not only provide more jobs for Hong Kong's young people, but also make contribution to China's economy. "The whole world is in a process of globalization, and Hong Kong is an externally-oriented economy so we could no longer keep eyes only on local 7 million population and must seek added-value outside since local market is not sufficient to sustain the growth. " "In 20 to 30 years, Hong Kong's GDP per capita could be increased by multiple times from current 40,000 U.S. dollars on condition that we find new market to sustain such a growth,"said Tsang, 64, who has been serving as Hong Kong's chief financial official for eight years.

ADVANTAGES THAT HK HAS

Prior to becoming financial secretary of the HKSAR government, Tsang had held multiple positions of industry, trade and commercial affairs for governments in Hong Kong. He said Hong Kong has several unique advantages in promoting"One Belt, One Road" strategy.

In transport and logistics, Hong Kong is one of the world's shipping center and aviation hinge. "Especially in air transport, Hong Kong has even more advantage. So far the air freight volume accounts for only 2 percent of the total volume of freight via Hong Kong but air freight value accounts for more than one-thirds of Hong Kong's total export value. We can do better."

Even in land transport, Tsang believed that Hong Kong also has much potential."When the construction of the Hong Kong-Zhuhai- Macao Bridge is completed, the land transport distance between Hong Kong's Kwai Chung container port and Vietnam's capital Hanoi will be much shorter."

In finance, Tsang said as one of the three international financial centers around the world, Hong Kong has the largest pool of offshore Renminbi fund and the first-class services of assets management, which could be developed into a major fund-raising and

financing platform for the"One Belt, One Road"strategy.

In addition, Tsang said Hong Kong has offered Sukuk, Islamic equivalent of bonds, under the SAR government's Bond Program in recent two years. The two Sukuks were both assigned credit ratings of AAA by Standard and Poor's. "The two Sukuks were very successful and acquired multiple rates of over-subscription,"Tsang said. "Many countries along the' One Belt, One Road'are Islamic countries. They might prefer Sukuk rather than ordinary debts in financing methods."

WHAT ROLES HK MAY PLAY

Tsang and other SAR government officials have just paid a visit to Beijing to attend a special meeting of the Asian Infrastructure and Investment Bank (AIIB) and met central government officials on various issues including what roles Hong Kong could play under the "One Belt, One Road"strategy in the future.

Tsang said he made a proposal in meeting Jin Liqun, secretary- general of the AIIB's preparatory office, that the AIIB could establish an office in Hong Kong as disputes handling center.

Tsang revealed that the AIIB has also showed interest in using Hong Kong as a debt-issuing platform."So besides acquiring financing resources from its members, debt-issuing will be the main financial source for the AIIB."

The official noted that Hong Kong has many advantages in debt- issuing. Firstly, Hong Kong is a place with very easy access to global investors. Secondly, Hong Kong has experience in offering Sukuk. Thirdly and the most important, Hong Kong has a very mature

financial market with lower costs for debt-issuing.

The financial secretary said that to help Hong Kong's companies promote their businesses, he will lead a delegation to visit countries along the"One Belt, One Road."

"We will start from Eastern European countries like Hungary and Poland in two or three months, and plan visits to countries in Central Asia and also countries along the maritime silk road next year." Endi