Policy Address

New Challenges

7.         The economic crisis has changed the landscape of the global economy. The Mainland has been less affected than others, and has emerged as a prominent economic power. While Hong Kong is relatively stable, our competitive environment has changed. Our first new challenge is to maintain Hong Kong's status as a global financial centre. To complement the stated policy of gradually internationalising the Renminbi (RMB), the Mainland needs multi-level international financial services. As the RMB moves towards internationalisation, the Mainland needs a highly open global financial centre that is fully aligned with the world financial markets to serve as its platform for foreign financial activities. Hong Kong can fit this role by making the best of our advantages. We can support the Mainland in promoting the regionalisation and internationalisation of the RMB. In the process, Hong Kong can help the Mainland enhance financial security and develop offshore RMB business. Recently, the people of Hong Kong have expressed concern about the financial development of Shanghai and the policy of the Central Authorities on this. Some even feel worried about this development. However, I believe that Hong Kong can work in collaboration with Shanghai and leverage our respective strengths to contribute to the development of financial services in the Mainland. The competition between Hong Kong and Shanghai is not a zero-sum game.

8.         Another new challenge stems from the significant breakthrough in cross-Strait relations over the past year. Hong Kong has been acting as a bridge between the Mainland and Taiwan in the trade and economic spheres. This intermediary role has been an integral part of Hong Kong's economic pillars, including trade, financial services and logistics. However, the opening of the “three links” this year has put pressure on this traditional role. In particular, there has been a drastic decrease in transit passengers and cargo transshipment. As cross-Strait economic and trade relations deepen, this part of our economy may face greater challenges. It is imperative for us to formulate an overall response strategy, which I will cover later.

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