Speech by CBR at the Hong Kong General Chamber of Commerce (English only)[Including a list of Overseas Trade and Economic Cooperation Zones (in Chinese)]
Following is the speech by the Commissioner for Belt and Road, Miss Yvonne Choi, at the Hong Kong General Chamber of Commerce
Stephen, Leland, Thomas, distinguished guests, ladies and gentlemen,
It is a pleasure for me to have this opportunity to share some of my observations, after attending the Belt and Road Forum on International Co-operation (the Forum) held in Beijing earlier this month. Stephen, who was also on the delegation, has offered some good insights. I will share with you some of the takeaways of mine.
Since its gradual rollout some four years ago, as announced by President Xi in 2013, the Belt and Road Initiative has received increasing attention from not only the Asia-Pacific and Eurasia regions, but also around the world, including Latin America and Africa. This was epitomized by the international nature of the Forum, which was attended by 29 heads of states, over 70 international organisations, including the leaders of the United Nations, IMF, World Bank and WTO, as well as over 1,500 participants from more than 130 countries. The US, UK, Germany, Switzerland, Japan, Australia and even countries in South America, such as Chile, had sent senior officials to attend the Forum.
The HKSAR made a strong presence at the event on 14 May. The Chief Executive led a high-level delegation, with 29 delegates comprising senior government officials and representatives from various sectors, including the four largest chambers of commerce in Hong Kong as well as professional services, including financial, engineering, architectural and legal services, etc. Stephen and I had the privilege to be members of the delegation. Our representation was the largest amongst all the Chinese provinces and cities. This clearly signifies the importance that the Central Authorities attached to the key role which Hong Kong has been and will be playing under the Initiative.
Project of the Century : Building Connectivity around the Globe
As President Xi Jinping put it, the Belt and Road Initiative is “the project of the century”. The breadth, scale and strategic importance of the Initiative are unprecedented. Apart from the large number of countries engaged, the "project of the century" is also characterized by its multi-faceted co-operation. “Connectivity” is perhaps one of the most frequently spoken words at the Forum, and featured in the different thematic parallel sessions.
Boosting infrastructural development to enhance transnational and cross-regional connectivity is naturally a core priority. According to the National Development and Reform Commission (NDRC), since 2013, China has invested more than US$ 50 billion in countries and regions along the routes of the Belt and Road. Data from the Ministry of Commerce shows that direct investment in 53 Belt and Road economies in 2016 accounted for 8.5 % of China's total outbound direct investment. That investment has kick-started a number of major projects, including railways, roads and highways, ports, and power plants etc.
What is more, connectivity is not confined to infrastructure construction. It has been pronounced from the outset that this “project of the century” focuses on policy coordination, unimpeded trade, financial integration and people to people bonds. Much emphasis had been put at the Forum on all these areas plus think tanks. China is indeed, as proclaimed, striving to use this platform to build bridges not only literally, but also metaphorically.
For the Belt and Road countries, investment made in infrastructural development has been changing the daily lives of their people. For instance, some of these countries are blessed with rich resources but hampered by a lack of basic infrastructure to harness these commodities. The Initiative has helped unleash their potential and create more opportunities, and represents a new page for these countries.
Outcomes of the Forum
Emerging from the Forum are a number of tangible outcomes. A joint communique signed by the 30 heads of states, which embraces bilateral, plurilateral, regional and multilateral cooperation, and strengthening of physical, institutional and people-to-people connectivity, was issued after the Forum. It reaffirms the commitment to build open economy and oppose all forms of protectionism, and seeks to promote a rule-based, open and multilateral trading system. Against the backdrop of rising protectionism, this is a very significant outcome which we all should cherish.
At the Forum, China pledged to contribute an additional RMB 100 billion (about US$14.5 billion) to the Silk Road Fund, and encouraged financial institutions to conduct overseas RMB fund business with an estimated amount of RMB 300 billion (about US$43.5 billion). The China Development Bank and the Export-Import Bank of China will set up special lending schemes respectively worth RMB 250 billion and RMB 130 billion to support Belt and Road cooperation on infrastructure, industrial capacity and financing.
In addition, a number of cooperation agreements and memoranda of understanding were signed by national governments, international organisations, local authorities and enterprises. Some 270 achievements were announced.
What’s there for Hong Kong ?
Today, there are no threats facing globalization more obvious than that of protectionism or populism. Against the backdrop of slow global economic recovery, the opening up of markets and regional economic co-operation, which the Belt and Road Initiative embraces, is ever more important. It is expected that in the next five years, China will import goods worth more than US$ 2 trillion from countries and regions along the Belt and Road routes. In addition, improved connectivity between countries makes trade with and entry into some non-traditional markets (such as Central Asian countries) easier. It is therefore important for all of us to ensure that we are participants, rather than on-lookers, of this project of the century.
Finance and Investment
Economically, the Belt and Road Initiative is not just about trade but also investment. Because of the Initiative’s sheer size, the estimated investment needs will be significant, and China has engaged in multiple forms of financial co-operation with countries and organisations involved under the Initiative. For example, the Asian Infrastructure Investment Bank (AIIB) has provided loans worth US$ 1.7 billion for nine projects in Belt and Road participating countries. The Silk Road Fund, officially launched at the end of 2014, has invested US$ 4 billion.
Financing bottleneck has been recognized as a key challenge to realizing connectivity. According to the China Banking Association, the outstanding value of loans extended by the two policy lenders (i.e. China Development Bank and the Export-Import Bank of China) to markets related to the Belt and Road Initiative have reached US$ 200 billion. The setting up of special lending schemes as pledged at the Forum is certainly a welcome move. But as remarked by Jim Yong Kim, President of the World Bank, at the Forum, “the benefits of the Initiative are broader than one project or one country. Projects will require innovative financing mechanisms – a mix of public and concessional finance and commercial capital”.
From 2016 to 2020, it is estimated that the total funding needed for infrastructure development in Belt and Road countries will amount to US$ 10.6 trillion. The NDRC plans to promote the “PPP” funding model to support public infrastructure projects. And it is here that Hong Kong can play a useful role. As an international financial centre, and as China's international financial centre, Hong Kong is well placed to benefit from Belt and Road opportunities in infrastructure financing, offshore Renminbi services, asset management, risk management and much more.
I understand that many Hong Kong financial institutions have moved fast and participated in the Initiative. For instance, the Industrial and Commercial Bank of China, the world's biggest bank by assets and listed in Hong Kong, has extended loans worth about US$ 67 billion for more than 200 projects under the Initiative, and financing for projects estimated around US$ 330 billion is in the pipeline. The multi-tiered financial cooperation network on Belt and Road is taking shape and this is an opportunity that we should not miss.
In addition to offering investment in infrastructure and other forms of hardware, there are opportunities for us to provide high standard, high efficiency and high value added services to support the Initiative. The importance of project quality has been much emphasized at the Forum. Hong Kong has abundant seasoned professionals in different sectors such as commerce, finance, legal, consultancy, information technology, construction engineering and management, project planning and development, etc. And more importantly, we have proven experience in working on such large scale, international projects.
In a recent survey that the Government conducted through the Association of Consulting Engineers of Hong Kong, for the past five years, Hong Kong consulting firms have taken part in over 70 engineering projects in countries including Indonesia, Sri Lanka, Poland, Egypt and Saudi Arabia etc. A number of these overseas projects were partnered with the Mainland contractors or investors.
Hong Kong as “Super-Connector”
We do believe that Hong Kong has a key role to play. As the Chief Executive pointed out on many occasions, Hong Kong’s unique dual advantages of “one country, two systems” have allowed us to play the distinctive role as a “super-connector”. We are the launching pad for companies eager to take their products and services to the Mainland of China. Equally important, with our internationally compatible commercial and legal systems, infrastructure and networks, as well as our strategic location, we are well-placed to help Mainland companies “go global”.
Partnering with Chinese companies to expand overseas
Over the past few decades, companies in Hong Kong have accumulated rich experience of going global. And I cannot emphasize more the value of such experience in the Belt and Road development, such as opening up overseas markets, expanding product exports, and increasing direct investment. It will be, in our view, a win-win situation for Hong Kong to work together with Mainland as well as overseas enterprises, and to leverage each other’s strengths and explore growth and expansion opportunities.
For companies that seek to establish more visible foothold in Belt and Road countries, it makes a lot of strategic and business sense to form partnership with Mainland’s and overseas companies in mega-projects such as those in the energy, infrastructure and transport sectors. They can tap more fully the opportunities created by the Initiative by providing quality services on the one hand, and mitigating risk exposure on the other.
Just now I mentioned the large number of agreements and MOUs signed, and some 270 achievements announced at the Forum. The Government will carry out a more in-depth analysis on them with a view to identifying opportunities and roles for Hong Kong. We will engage the relevant stakeholders in the process in due course.
Meanwhile, a lot is already happening with more projects in the pipeline. For instance, Chinese companies have won contracts to build high speed railways in Russia and Indonesia. China has helped to build a metro system in Addis Ababa. A standard gauge railway is being built in Kenya to link the port of Mombasa with Nairobi, and eventually with neighboring Uganda, Rwanda, and South Sudan. Other big-ticket projects that are underway include Sri Lanka's Colombo International Financial City, a China-Laos railway that began construction in December 2016, and a China-Thailand railway which is scheduled to begin construction later this year.
Significant progress has also been made under the China-Pakistan Economic Corridor (CPEC) initiative. Development of Gwadar Port, and construction of the Karachi-Lahore Motorway are both CPEC flagship projects. Energy is another major pillar of CPEC, which included 16 prioritised projects in coal-fired plants, hydropower facilities, wind and solar power farms with a total capacity of 10,400 megawatt. In connection, industrial cooperation projects, the Haier-Ruba Economic Zone (Phase II), Gwadar Free Zone, industrial parks, IT and telecommunication systems, etc. are being taken forward.
This “project of the century” is an inclusive, strategic, and open concept. It is as much about vision as well as implementation. It brings new driving forces and new imagination to the global economy. Numerous business possibilities are being offered under the Initiative. As President Xi rightly pointed out at the annual meeting of the World Economic Forum held in Davos earlier this year, “the Belt and Road Initiative originated in China, but it has delivered benefits well beyond its borders.” It is important for us to act now, and to be the first movers under the Initiative. In the days to come, the Government, including my office, will work closely with all the stakeholders to continue to support such efforts.
The Government earlier this month launched a short video and a compendium to introduce to the public Hong Kong's strengths and contributions made in participating in the Belt and Road development. The compendium gives examples of projects, investment engaged and professional services provided by Hong Kong-based companies in the Belt and Road regions and other countries. Both the video and the compendium can be viewed from the new Belt and Road website (www.beltandroad.gov.hk). It testifies our expertise and capacity in playing the role as a key link for the Belt and Road.
Ends/Thursday, May 26, 2017