Paul Yeung believes that the SAR’s future lies in being a ‘super-connector’ and maximizing all the advantages offered by the economic development of the region
Hong Kong’s future development depends greatly on whether it can make full use of its advantages and potential to participate in the mega projects being undertaken in the region. In the era of connectivity, there is every reason to believe Hong Kong is competent to play the role of a “super-connector” in the region. The new trade corridor proposed by China and Singapore last month could provide the SAR with another great opportunity to play such a role.
China and Singapore signed a memorandum of understanding last month to develop the New International Land-Sea Trade Corridor under the China-Singapore (Chongqing) Demonstrative Initiative on Strategic Connectivity. This new trade corridor will link western China with Singapore. Hong Kong should seek to proactively participate and leverage its strengths in this new project. But before getting into the game, we need to determine first our positioning — as this is the key to success in joining a connectivity project. To find an answer to this crucial question, the One Country Two Systems Research Institute has examined possible opportunities for Hong Kong as well as its strength in the corridor project. It came up with the idea of a “Southern Economic Corridor” (SEC), which expands the original transport and logistics scheme into a regional economic development project.
This new trade corridor will link western China with Singapore. Hong Kong should seek to proactively participate and leverage its strengths in this new project. But before getting into the game, we need to determine first our positioning — as this is the key to success in joining a connectivity project
The study result suggests the SEC will provide enormous opportunities for Hong Kong. One of the most significant strategies for Hong Kong is to expand its economic hinterland to western China. As Hong Kong’s shipping industry faces increasing challenges, the rapid trade growth in the Southwest China will result in increasingly greater southbound cargos through the Guangxi Zhuang autonomous region. With the development of the SEC, Hong Kong can make use of the Qinzhou Port in Guangxi as one of her feeder ports and thus expand its economic hinterland into the central west of China. The SAR government should position Hong Kong in the new corridor in the following three ways.
Firstly, Hong Kong should act as the regional supply-chain management hub in the corridor. With well-established international connectivity, the SAR should offer more value-added supply-chain management services to companies operating in the region and attract foreign companies to establish headquarters in Hong Kong, thereby enhancing Hong Kong’s role as the regional supply-chain management hub. Furthermore, the city can provide expertise in transportation systems operation and construction management. With increasing infrastructure projects to be built or upgraded in western China, Hong Kong could offer its international-standard expertise in transportation systems operation and construction management.
Secondly, Hong Kong can be a facilitator in the import and export trade of the mainland. Hong Kong could leverage its strengths in the global trading network, such as its experience in the European market and her trade and cultural links with Southeast Asia nations; it can also facilitate imports and exports from the mainland. In particular, with vast domestic consumption demand to be unleashed on the mainland, Hong Kong business people can exploit this situation and develop import and distribution businesses, cultivating new consumer habits and boosting consumption in the mainland market.
Thirdly, Hong Kong can play a crucial role as a professional service provider in the development of the corridor. As an international financial center, Hong Kong could be the most accessible financing platform for SEC companies. This could include activities such as public listings in Hong Kong and using the city’s diversified financial services to meet their many needs. The city can also leverage its international reputation to facilitate the mainland’s investments in the Belt and Road countries — by assisting mainland companies to adapt to the local business environment and improve their skills in managing their businesses in Belt and Road markets. To promote the development of professional services, the SAR government should seek policy support from the central government to allow the backflow of offshore RMB and encourage the use of RMB in international trade settlement.
What is more, the government can encourage Hong Kong banks to open branches in the major cities in the SEC region, exporting Hong Kong’s financial services. For Hong Kong securities firms doing business in the mainland market, the restrictions should be further relaxed to promote greater financial and economic collaboration between the two sides. The pilot implementation under the CEPA arrangement should possibly be expanded to the SEC region, allowing greater market access for Hong Kong’s professional services and thus helping SEC companies improve their brand value and management.
Phil Jackson, the head coach of the NBA champion Chicago Bulls from 1989 to 1998 made this excellent point: “The strength of the team is each member. The strength of each member is the team.” Pondering Jackson’s astute comments we can easily realize that the central government’s support and team work are crucial factors to Hong Kong successfully securing a significant role in the SEC project. Hong Kong should join the national team and play as a “key man” in the team.
The author is research officer of the One Country Two Systems Research Institute
HONG KONG NEWS