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Stability to prosperity

To celebrate the 25th anniversary of Hong Kong returning to the Motherland this year, The SAR Government has organised various legal forums over the past three days. The themes of the forums focused on rule of law, constitutional order, the Constitution, the Basic Law, Hong Kong National Security Law, the relations between the above and the design and implementation of the “One Country, Two Systems” arrangement, as well as their importance in safeguarding the social stability and prosperity of Hong Kong. These forums have helped different sectors of our society to deepen their understanding on these important issues.

The “One Country, Two Systems” arrangement is an epoch-making design that endows the Hong Kong SAR with unique institutional advantages. Not only can Hong Kong implement the capitalist system within “One Country” and connect with the world, but also we can benefit from the opportunities brought about by the rapid development of the Mainland, which implements socialism with Chinese characteristics. The flexible arrangement of “One Country, Two Systems” is Hong Kong’s core competitive edge, enabling Hong Kong to prosper and develop into an international financial, transportation and trade centre, as well as a centre for international legal and dispute resolution services in the Asia-Pacific region. Today, Hong Kong still plays an irreplaceable and unique role in our country’s development.

The Basic Law stipulates the arrangements for Hong Kong to adopt a free trade policy, and to continue to be a free port and a separate customs territory; to maintain the status of the Hong Kong dollar and Hong Kong’s status as an international financial centre; to have independent public finance and tax system; to safeguard the free flow of people, capital, goods and information; to safeguard the property of individuals and investors; to continue to implement the common law system, with courts that continue to exercise independent judicial power including the power of final adjudication. The Basic Law is not only an important foundation for the HKSAR Government to implement policies in accordance with the law, but also the basis for businessmen’s and international investors’ confidence in Hong Kong’s economic development.

Yesterday I delivered a speech on the National Security Law Legal Forum- Thrive with Security.

After years of political turmoil in Hong Kong caused by foreign and external forces and black-clad violence in 2019, the Hong Kong National Security Law safeguards the security of the country and Hong Kong through legislation, creating a safe and stable environment for the Hong Kong society, providing room for economic development, providing more effective guarantee for the personal safety and freedom of citizens, and further consolidating Hong Kong’s status as an international financial centre.

The figures speak for themselves. Since the implementation of the Hong Kong National Security Law, the amount of funds raised through initial public offerings in Hong Kong exceeded HK$650 billion, an increase of over 30% compared with the same period before the implementation. The average daily turnover of Hong Kong stocks since the implementation surpassed HK$150 billion, which is about 60% higher than the 12 months preceding the implementation. Assets under management by our asset and wealth management industry amounted to around HK$34.9 trillion as at end-2020, registering a growth of 20% over the amount before the law was implemented. The total deposits in the Hong Kong banking system reached HK$15.3 trillion recently, an increase of about 10% compared with that prior to the implementation of the law.

The recent Russia-Ukraine conflict has made it clear how the United States weaponises the US Dollar and the international financial systems, blatantly distorting and interfering with the operation of the global financial markets. Security is not only a main focus of our country, but also a risk that enterprises should carefully assess. We recently further streamlined the requirements for Greater China enterprises to seek secondary listing in Hong Kong, with a view to supporting the return of “China Concept Stocks” that need to manage political risks.

In fact, we have been endeavouring to revamp our securities market regime so as to enhance its competitiveness, including the implementation of a series of reforms to the listing regime. For example, the Hong Kong Exchanges and Clearing Limited launched a new listing regime in April 2018 to allow emerging and innovative enterprises that have weighted voting rights structures and pre-revenue / pre-profit biotechnology companies to list in Hong Kong, and establish a concessionary route for relevant qualifying issuers to seek secondary listing in Hong Kong. As at the end of April 2022, a total of 74 companies had been listed through the new regime with more than $580 billion raised, representing over 44% of the total fund raised through initial public offerings in the same period. Hong Kong has also become Asia’s largest and the world’s second-largest fundraising hub for biotechnology. Since 2019, 21 “China Concept Stocks” issuers have returned to Hong Kong through secondary listing or dual primary listing, the total market capitalisation of which accounted for over 70% of all “China Concept Stocks” listed in the United States.

With the support from our country and leveraging our institutional advantages under the “One Country, Two Systems” arrangement, Hong Kong is able to pave the way for its future success through continuous efforts amid the ever-changing global context. The mutual market access scheme is one of the special strengths uniquely created in Hong Kong with the support by our country, which could hardly be copied by other markets. From Stock Connect, Bond Connect, mutual recognition of funds, to the market’s much anticipated mutual access of exchange-traded funds just announced last Friday, they have continuously brought new opportunities in an incremental manner, and gradually developed Hong Kong as a secure channel connecting the Mainland with foreign capital and markets. We will strive to further expand the breadth and depth of mutual market access.

The world is experiencing profound changes unseen in a centruy and geopolitical tension has been intensifying. As a fully open international financial centre, Hong Kong has to be well prepared and equipped with contingency plans for different risks. We need to understand that national security is the prerequisite for economic development, while economic development could provide protection for national security. For this, we have to strengthen two points of understanding. First, we have to look at the development of Hong Kong from the holistic view of national security, and work on contingency planning with the “bottom-line mentality”. Second, we have to establish the mind set for comprehensive development, which promotes economic development in a diversified and balanced approach, with a view to enhancing the flexibility and resilience of our economy in tackling the complicated external environment, while ensuring most people of the society could better share the fruit of economic development, thus paving a more solid foundation for long-term social stability.

This year is the 25th anniversary of Hong Kong’s return to Motherland, which also marks a new historic starting point for Hong Kong’s development. We have to keep deepening our understanding and thinking on the accurate implementation of the “One Country, Two Systems” arrangement, so that we could better utilise the advantages and flexibility of this arrangement. At the same time, we have to safeguard the bottom-line by faithfully implementing the Basic Law and the Hong Kong National Security Law, so as to create the necessary and conducive conditions for the robust development of Hong Kong. I firmly believe that if the whole society could stay united to well safeguard the bottom-line of national security, with the staunch support of our country, we can build a bright future for Hong Kong!

May 29, 2022