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Financial Secretary

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Economic security and national security

Last Thursday was the National Security Education Day. The SAR Government organized a series of promotional activities in schools and the community, and hosted a thematic seminar in which speakers talked about the importance of national security from the aspects of political security, economic security, territorial, military and overseas-interests security and how they could be safeguarded properly. In fact, a holistic approach should be adopted in safeguarding national security, which comprises the protection of national sovereignty, safety, territorial integrity and development interests.

Last Thursday, I attended the thematic seminar of the National Security Education Day and delivered a recorded keynote speech.

Economic security is an integral part of the national security. As we see from history, a robust economy is always the foundation of a strong country. On the contrary, a declining economy often leads to people’s suffering, social unrest and political instability, or even foreign invasion. Over the past few decades, it is not uncommon to see attempts to overthrow other countries’ regimes by destroying their economies and disrupting their financial systems, leading to social unrest and political turmoil. Those so-called sanctions, economic blockades, or even the weaponisation of the currency clearing system, are the economic and financial means usually used in threatening other countries or even destroying their regimes.

Safeguarding the safety of the economic sector is a war without gun smoke, so to speak.

Only by having a robust economic growth, we could have the resources and power to improve people’s livelihood and protect our own safety. Without a safe and stable political and social environment, it is hard for any economic growth. National security is the prerequisite for economic development, while economic development could provide protection for national security. They are actually two sides of the same coin that we have to handle with a holistic approach.

In the economic area, not only we need to have the mindset to grasp development opportunity, but also the awareness of risks to take precautionary actions. With a “bottom-line mindset”, we should make efforts in establishing the institution and mechanism for security development and building capacity to guard against both foreign and domestic threats.

As for risk management, we should focus on safeguarding all sorts of significant risks and challenges. Not only we need to be highly vigilant to “black swan” events, i.e. incidents beyond expectation with severe consequences, but also prevent “grey rhinos” threats from potential hidden conflicts. We also have to tackle the shortcomings and bottleneck constraints in the process of development.

Looking back in history, although the trigger points of the 1997 Asian Financial Crisis and the 2008 Global Financial Crisis are different, both are common in the sense that loopholes in risk management and alert system did exist in the economic and financial system. This is why apart from plugging the loopholes identified, we also paid extra attention in the need of establishing a risk alert mechanism, including assessing different types of risks, building a risk warning and monitoring system, and enhancing the capability of continuous dynamic monitoring and real-time warning. We need to enhance the collection of information and enable a comprehensive use of different data, information and intelligence for monitoring, analysis, forecast and warning, so as to identify the signs and source of the risks early and nip them in the bud.

Besides establishing a risk alert system, we should also develop a contingency mechanism, with a view to ensuring a smooth coordination between crises warning, command in contingency, on-site handling, recovery and rebuilding, as well as post-event evaluation. At the same time, we need to have a proactive management on information dissemination to lead public opinion and manage expectation, so as to prevent any secondary risks.

At the same day, I participated in a community event to join hands with other citizens in expressing our wills in safeguarding the national security.

In addition to enhancement of mechanisms, we also have to ensure the security of our key sectors.

First, we should ensure the development security of our key industries, promote continuous economic development, create jobs and increase tax revenue. Taking the financial sector for instance, we need to keep enhancing its competitiveness, exploring space for development, overcoming the weaknesses while consolidating the strengths, with a view to strengthening and enhancing our advantages as an international financial centre. Another example is the innovation and technology sector. Technology will determine the global economic development in the coming future, and the capability to develop and apply technology is key to any economy’s competitiveness. Under the 14th Five-Year Plan, our Country is endeavoring in innovation development to achieve self-reliance on technology. On the one hand, Hong Kong needs to strengthen our own R&D capability and forge a vibrant ecology for innovation and technology; while on the other hand, we need to have more cooperation with other places to attract foreign and domestic talents, technology enterprises and key technologies to come to Hong Kong, so as to help our Country to overcome the hurdles in these aspects.

Finance is the lifeline of the economy and financial security is the cornerstone of economic security. Our paramount priority is to prevent any systematic financial risk from happening, of which the most important task is to ensure the stability of our monetary system. We are determined to defend our Linked Exchange Rate System, which is key to secure the confidence of the society and the market. We need to establish an effective regulatory system to ensure order developments for different financial trades, such as banking, securities, insurance and asset management. At the same time, it requires an effective supervision over cross-sectoral risks in order to plug the possible loopholes due to trade-divided regulations on the market. In addition, to assist the Country in the process of opening up its financial sector, Hong Kong should play our roles as “testing field” and “firewall” to mitigate or even prevent foreign market risks from transmitting to the Mainland market. Meanwhile, not only we have to crack down on money laundering and financing of terrorism, but also any financing activities that could violate the National Security Law, ensuring our financial system will not be used to carry out activities that could threaten the national security.

Moreover, we need to safeguard the security of key infrastructure, and to ensure the sufficient supply and security of food, water and energy, with a view to ensuring the safety and convenience of people’s living and travel, as well as the smooth operation of economic activities.

Political stability and social safety are the bedrocks for economic security. Last year, the Country has legislated the National Security Law for Hong Kong SAR in order to plug the legal loopholes in national security for Hong Kong and enhance the protection system on national security. This year, the Country is set to improve the electoral system of Hong Kong to fully implement the “patriots administering Hong Kong” principle. Also, with the SAR Government’s enhancement of the oath-taking arrangement for public officers according to Article 104 of the Basic Law, the system and implementation mechanism of safeguarding national security in Hong Kong will be further improved.

The SAR Government will make its best endeavour to take forward the above initiatives and ensure their effective implementation. At the same time, we shall learn from experience and continue to improve our work so as to keep abreast of times, ensure our capability in coping with the new risks that come along with new situations, and the new challenges brought by technological advancements. Through the above works and by defending the bottom-line, we can make contributions in safeguarding the national security.

April 18, 2021


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