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Financial Secretary


Safeguard the bottom-line and make way for the future

Last week, I attended the Basic Law 30th Anniversary Legal Summit. Following the social unrest broke out last year and the subsequent political development, it is particular timely and important to enhance public understanding of the "One Country, Two Systems", as well as the relationship between our Country's Constitution and the Basic Law. With its drafting and the related consultation began in the 1980s, the Basic Law was promulgated in 1990 and has been implemented in Hong Kong since July 1, 1997. Since then, Hong Kong's local environment, our Country's development, as well as the global political and economic situation have all gone through tremendous changes. The operation of the "One Country, Two Systems" arrangement and the Basic Law have supported Hong Kong's prosperous development for more than 20 years. During the period, problems have been overcome while new challenges also arise. The public understanding of the "One Country, Two Systems", the actual operation of the system, and changes in both the internal and external environment have caused disturbances and inconsistencies which in turn affect Hong Kong's stability and development, as well as the national security. We therefore have to fully understand the purpose and mission of the "One Country, Two Systems", respect and treasure the arrangement, and promote the comprehensive and precise implementation of the Basic Law through refinement. By this, we can enhance Hong Kong's institutional infrastructure, and facilitate Hong Kong's stability and future development.

Our Country adopts socialism as the core of its system, while accommodating cities built on capitalism. The Constitution is the foundation of the Country and it authorises the operation of Hong Kong's system through the Basic Law. These form the framework of the "One Country, Two systems". By upholding the bottom-line and premise of "One Country", respecting the socialism system of the Country, and safeguarding the national sovereignty, territorial integrity and development interest, Hong Kong's capitalism system will have a greater space for further development. Just like any other systems in the world, to maintain its vitality and keep abreast of the times, the "One Country, Two Systems" arrangement needs to be enhanced from time to time taking into account social development, changes in the internal and external environment, as well as implementation experience. Nonetheless, no matter how things change in time, we have to hold onto the purpose and mission of the "One Country, Two Systems" and the Basic Law, attach importance to Hong Kong's constitutional order, responsibilities and norms, and keep enhancing the implementation mechanism of the institutional and legal systems. Only by doing so, the implementation of the "One Country, Two Systems" and the Basic Law can continue to maintain Hong Kong's long term prosperity and stability.

The stable development of the Country has always been the greatest support to Hong Kong's development. Leveraging the benefits of "One Country", Hong Kong enterprises could ride on the Mainland's development and its huge market size to seize the enormous business development and collaboration opportunities. Hong Kong has continued to maintain and upgrade its role as the gateway and intermediary, and transformed itself from a trading port in the past to an international financial, transportation and trade centre today. Apart from serving the Mainland economy and the development needs of Mainland enterprises, we also facilitate foreign enterprises and capital to explore development opportunities in the Mainland market. This is the flexibility and advantages that we could enjoy under the "One Country, Two Systems" arrangement. Being a part of the Country, the Country has always been providing Hong Kong with the greatest support in people's livelihoods and social development. From daily food and water supplies to the recent fight against the COVID-19 pandemic, the Central government has been offering solid support and assistance to Hong Kong.

To rightly position Hong Kong and plan for the future, it is necessary for us to strengthen the framework of "One Country, Two Systems" and operate within the ambit of the Basic Law. The Country is now entering into a new phase of development, forming a new development pattern with the domestic market as the mainstay while letting internal and external markets boost each other. Against this backdrop, how could Hong Kong capitalise on our advantages under the "One Country, Two Systems" arrangement?

As a part of the Country, Hong Kong will definitely play a role in the domestic market. Hong Kong enterprises could sell their products and provide high-value-added and professional services in the domestic market, as well as to assist foreign products to establish their distribution channels in the Mainland. From the aspect of industrial chain, Hong Kong has advantages and potential in research and innovation, product R&D and standard setting. The Guangdong-Hong Kong-Macao Greater Bay Area development will also be a major springboard for Hong Kong to participate in the domestic market.

As for the international market, Hong Kong could surely play an important role in financial services and innovation and technology. Taking financial services for instance. With the Country's continuous economic growth and its increasing weight in the global economy, the international use of Reminbi and the demand for its derived investment and risk-management products will grow quickly. As the world's largest offshore hub of Reminbi services, Hong Kong will see greater potential in promoting the internationalisation of Reminbi.

China has recently signed the Regional Comprehensive Economic Partnership Agreement (RCEP) with 14 countries, including the 10 ASEAN countries, Japan, South Korea, Australia and New Zealand. This is the world's largest trade agreement so far, covering about one third of the world's population and the global GDP. Amid the worldwide advocacies for de-globalisation and the doubtful attitude towards multilateralism on trade, the signing of the RCEP is truly meaningful. Members will implement mutual tariff reduction, open up market access, remove trade barrier and simplify custom clearance procedures, all of which will help further lowering the cost of trade among the members region. RCEP will promote the Country's trade and foreign investment, expand the import of advanced technology, equipment and parts, and facilitate the further development of the regional industrial chain.

Last year, Hong Kong's bilateral trade on goods with the 15 RCEP members amounted to US$ 765.5 billion, accounting for 71% of our total trade on goods. Although Hong Kong does not levy any customs tariff on most imports and has a relatively small manufacturing sector, joining the RCEP could still benefit other sectors such as trade on services and investment. In view of the above, Hong Kong has already expressed our interest in joining the Agreement to all RCEP members in 2018. We will work in accordance with the related clauses of the Agreement, with the objective of enabling Hong Kong to be the first batch of new members after the Agreement taking effect.

While actively taking part in the Country's domestic market, Hong Kong will continue to make its best efforts to explore development opportunities in the international market, so as to give impetus to our economy. We will also play a more active role in the development of and resource allocation in regional industrial chain, and identify more potential markets and sectors for the promotion of high-quality economic development in Hong Kong.

November 22, 2020

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