By Li Wei, DRC

2017-6-16

Distinguished Chairman Tian Guoli,

Distinguished Guests,

Ladies and Gentlemen,

Good morning.

After the successful conclusion of the first Belt and Road Forum for International Cooperation sponsored by DRC and held in Beijing in May this year, we are glad to usher in the opening of this forum. Please allow me to express my congratulations to this meeting. This year is the 20th anniversary of Hong Kong’s return to the motherland. The development of Hong Kong is experiencing a new stage, and China’s participation in international cooperation and global governance has entered a new phase. In the new historical era, we are happy to gather here to discuss the role of Hong Kong in the “going global” strategy for China’s enterprises as well as Hong Kong’s function in pursuing the Belt and Road Initiative. I would like to take this opportunity to say a few words on the following issues.

I. The Belt and Road Initiative contains numerous development opportunities.

The Belt and Road Forum on International Cooperation held last month is a complete success. Attending the meeting were twenty-nine foreign state leaders, governments heads and three directors of major international organizations including UN Secretary-General, and there were also 1,500 senior representatives from over 130 countries. The keynote speech given by President Xi Jinping has aroused extensive attention and received great response. The Development Research Center of the State Council (DRC) and the National Development and Reform Commission (NDRC) jointly hosted the summit forum on “Policy Communication and Strategy Synergy” and I had the pleasure to chair the meeting. At the meeting, representatives from various countries showed a positive attitude and actively expressed their views. They spoke highly of the Belt and Road Initiative and were looking forward to the positive results of the Initiative. Besides, they also put forward many constructive suggestions. Why do so many countries concentrate their concern on the Belt and Road Initiative? The reason is that it is in line with the historical tide and the wishes of people in countries along the Belt and Road routes, who are longing for peace and pursuing development. Due to proactive efforts made by us, many development opportunities will be brought forth for countries along the routes, such as the opportunity for the improvement of their fundamental infrastructure, the enhancement of their industrialization and urbanization and the upgrading of their industrial structure. In fact, the Belt and Road Initiative is a win-win proposal and it will also do good to China’s development, bring valuable opportunities for China’s enterprises to go global and increase their presence in the international market.

1. The opportunity for the enhancement of “made in China” development strategy. During China’s economic development, we have completed the construction of modern fundamental facilities that have amazed the whole world and the mileage of highway and high-speed railway both rank the first in the world. In the meantime, China has enhanced construction capacity. Among the top 250 international project contractors in the world, 65 of them are from China, the number of which is twice that of the U.S. People often say that if one wants to become rich, he must build roads first. Many countries along the routes have made the improvement of their fundamental infrastructure the top priority in their economic development and have formulated a good number of plans for fundamental infrastructure investment. Under the framework of the Belt and Road Initiative, different countries have continued to promote the synergy of their development plans, strengthen their customs cooperation, enhance their transportation facilitation, and flesh out the capital cooperation platform. These have offered China’s international project contractors a broader space and favorable environment to increase their investment in the international market.

2. The opportunity for China’s enterprises to conduct overseas production layout. The advantage of China’s labor costs has been weakened, the land costs are increasing, and the competitiveness of its labor-intensive products is declining, which have forced China’s enterprises to seek for new production bases. Through policy communication and cohesion between the development strategic plans of China and those of other countries, the Belt and Road Initiative has witnessed improvement in the macro-environment for international production capacity cooperation. The pace of enhancing infrastructure connectivity is accelerated, the barriers blocking manufacturing enterprises from going global are reduced, the operation costs are dropping, and the economic feasibility of conducting production layout in larger areas is enforced.

3. The opportunity for the development of port cities and logistics enterprises. The goal of the construction of the Belt and Road infrastructure network is to realize the two-way connectivity between the east and the west and between the north and the south. With the overall development of land and marine linkage as well as land and air network, the connectivity not only contains infrastructure facilities of the same kind, but also the connection and transfer of different types of infrastructure, which will greatly enlarge the border of logistics and personnel and improve their efficiency. In 2016, the number of China-Europe trains put into service operation reached 1700, which was double that of 2015. The rail service has not only brought us wine from Span, cheese from the Netherlands, fruits from Poland, milk of superior quality from Belarus, but also carried clothes, luggage, tools and hardware, auto spare parts, electronic devices made in China, Japan and South Korea and tropical fruits from counties in Southeast Asia to the hinterland of Eurasia.

4. The opportunity for the promotion of service industry. The construction of the Belt and Road Initiative includes fields directly linked to the development of service industry such as policy communication, financing and the cooperation on talent projects. Besides, facility connectivity and smooth trade exchanges are inseparable from the proactive support of financial, consulting, accounting, legal, and information industries. These facts have not only raised higher and more urgent requirements on the capacity upgrading of service industry, but also provided broader development space for the development of service industry. For instance, fundamental infrastructure construction requires the provision of a huge amount of capital, outward direct investment and building factories abroad need a lot of market research, the signing of cooperation agreements under different legal systems calls for plenty of specialized legal services; the expansion of trade scale and the increase of currencies involved are in need of stronger transaction management capacity of clearing centers. For the sake of accelerating the construction of the Belt and Road Initiative and pushing forward regional economic cooperation, China has established the Silk Road Fund and taken the lead in making preparations for the establishment of Asian Infrastructure Investment Bank (AIIB) and BRICS Development Bank. Besides, China has newly founded or increased input in a number of bilateral cooperation funds. The Export-Import Bank of China (CEXIM), China Development Bank (CDB) and a number of commercial banks have formulated overseas expansion plans, which calls for more financial talents and further financial cooperation.

II. Hong Kong boasts unique advantages in pursuing the Belt and Road Initiative

During the past four decades of reform and opening-up in mainland China, Hong Kong has played a major role and it serves as the largest source of foreign capital for the mainland, and the window as well as the transfer station of the mainland’s outward investment. In the new era, Hong Kong still enjoys numerous advantages which are beyond many provinces and cities in the mainland.

1. Geographical advantages. Hong Kong is located at the key node of the south-bound and west-bound 21st Century Maritime Silk Road. Mainland China is in its north; ASEAN countries and South Asia are respectively to its west and south; Japan and South Korea are respectively to its east and north and Asia’s major commercial cities are all within four hours’ flight from Hong Kong.

2. Business environment advantages. Hong Kong has been awarded the world’s most liberal economy for 20 years. With excellent market performance and booming financial, legal and accounting industries, many international corporation centers are gathered in Hong Kong, making it the world’s famous free trade port, and international trade and financial center. According to the 2017 World’s Competitiveness Annual Report released on May 31 by the International Institute for Management Development in Lausanne, Hong Kong has been named as the worlds’ most competitive economy among 63 countries and regions for two consecutive years.

3. Talent advantages. Hong Kong has the world’s first-clsss education. According to the latest World University Ranking released by Quacquarelli Symonds (QS), a UK educational organization, six universities from China are among the top 50 universities in the world and half of them are from Hong Kong including the University of Hong Kong, Hong Kong University of Science and Technology and the Chinese University of Hong Kong. A number of high-end talents are cultivated in the course of educational development in Hong Kong, and Hong Kong’s booming financial, management and consulting, legal and accounting service industries has attracted a lot of specialized service institutes and talents with a global vision. They are familiar with international laws and regulations and are rich in the experience of dealing with international businesses and they are valuable resources of Hong Kong for its participation in pursuing the Belt and Road Initiative.

4. Cultural advantages. Hong Kong boasts the advantages of the interaction of eastern and Western cultures. People here not only have the good virtue of being diligent and intelligent, but are also imbued with the Westerners’ pioneering and enterprising spirits. Hong Kong and Mainland China belong to the same descent group and its management institutions are similar with that of Western countries. Most of Hong Kong people are well up in two written languages including Chinese and English and three spoken languages such as national language, English and Cantonese. As a result, there is no language barrier for them relating to domestic cooperation and international exchanges.

III. Hong Kong could make use of historical opportunities to realize a brighter future.

At present, international political and economic patterns are undergoing profound changes and adjustment and the worlds’ economic centers are moving eastward, making cooperation advanced by the Belt and Road Initiative become more important. Hong Kong is facing new historical opportunities to create greater glories and it is advisable for Hong Kong to go with the trend of the times and take proactive actions.

1. Development plans need to be well formulated with well-defined strategies. In the new era and at present stage, Hong Kong needs to continue to play its leading role apart from its “window effects” at a commanding height. Its function as a bridge in the mainland’s international cooperation needs to be strengthened. For instance, Hong Kong could serve as a guide for the mainland prior to investment making by the latter and provide the mainland with information relating to market and project performance prospects; Hong Kong could serve as a consultant for the mainland when the latter decides to make investment and help the mainland investors’ coordinate financing and avert risks; Hong Kong could play as a judge after the mainland makes investment and provide the latter with assistance relating to capital exit channels, the balance of benefit allocation and the reconciliation of business disputes.

2. Its cooperation with the mainland needs to be enhanced in a coordinated manner. The Belt and Road Initiative covers a wide range with a broad space for cooperation. It involves diversified participants and has many opportunities whereas there are also numerous challenges. The whole country should coordinate all the actions and differentiate their positions according to their respective advantages, and they are required to support each other and work closely to form joint forces to realize common development. In March this year, China put forward the development plan of Guangdong-Hong Kong-Macao Greater Bay Area, which aims to cultivate a world-leading bay area and metropolitan area and promote the status and function of Hong Kong and Macao in national economic development and opening-up. Hong Kong, Macao, Guangdong and Shenzhen are all modern cities with highly-developed economies. If they can develop with joint efforts, it can be considered as a powerful combination and their international competitiveness will reach a new high. Guangdong-Hong Kong-Macao Greater Bay Area will hopefully and soon become one of the world-leading bay areas. As we know, Tokyo, New York and San Francisco bay areas are internationally-acknowledged well-known bay areas.

3. We need to stick to innovation-driven development mode with think tanks playing a leading role. People often say that to build on and sustain what has been achieved relies on inheritance and social and economic transformation depends on innovation. “Change” is the main feature of current world. It could be found that the world’s economic and political pattern is changing, and the production, consumption and business modes are also changing. We need to learn more knowledge about technologies and theories so as to better adapt to the new situation, grasp new opportunities and address the new challenges. What’s more, we need to implement new concepts, establish new ways of thinking and explore new development modes. Think tanks boast the advantages in knowledge, talents and specialty, and they have a forward-looking, systemic and objective insight in response to problems. They can and need to play a leading role in local strategic policy-making and international coordination. Hong Kong has profound intelligent resources and broad space for cooperation with domestic and international think tanks. In 2015, DRC, together with relevant international think tanks, jointly launched the Silk Road Think Tank Network (SiLKS) in Madrid, Span with the aim of pushing forward the Belt and Road Initiative through joint consultations and co-construction by way of intelligent support. On May 16, SiLKS held an annual meeting in Beijing and attending the meeting were representatives from 43 famous think tanks of more than 30 countries, 12 international organizations and 20 international corporations. They reached an important consensus on jointly pursuing the Belt and Road Initiative and released Beijing Declaration with Joint Action on Silk Road Think Tank Network. We warmly welcome think tanks and enterprises from Hong Kong to actively participate in research and discussion as well as exchanges and cooperation with SiLKS.

Ladies and Gentlemen.

Hong Kong is known as the Oriental Pearl and it has created the historical miracle and built Hong Kong from a primitive and small fishing village into a modern international metropolis. We hope that in the new historical era, Hong Kong could make full use of the opportunity brought about by the Belt and Road Initiative with pioneering spirit, make cooperation with its counterparts in the mainland, tap the market potential with its advantages along the belt and road routes and create greater glory.

Thank you.

Note: Li Wei, President, Deputy Secretary of the Leading Party Members’ Group and research fellow of DRC

The article is a speech given by Li Wei on June 14, 2017 during the summit forum on the 20th anniversary of Hong Kong’s return to the motherland.