Hong Kong Aims to Strengthen Position as Global Financial, Shipping, and Trade Hub

CE's speech in delivering "The Chief Executive's 2024 Policy Address" to LegCo (3)

III.Consolidate and Enhance Our Status as an International Financial, Shipping and Trade Centre

29. The development of international financial, shipping and trading centres are closely intertwined. Besides expanding and strengthening our existing businesses, we will also explore new growth areas, specifically by creating a commodity trading ecosystem to attract relevant enterprises to establish presence in Hong Kong, turning our city into an operation centre for international commodity trading, storage and delivery, shipping and logistics, risk management, and more. This will help develop the markets in international gold, non‑ferrous metal, green transportation, and others, further promoting the integrated development of Hong Kong as an international financial, shipping and trade centre.

30. Hong Kong ranks among the world's largest import and export markets for gold by volume. The current complexity in geopolitics underscores our city's edge in security and stability, and hence an attractive location for investors for gold storage, spurring relevant activities such as gold trading, settlement, and delivery. We will capitalise on our strengths as an international financial centre to build Hong Kong into an international gold trading centre.

31. The Government will facilitate an international commodity exchange to set up accredited warehouses in Hong Kong. We will also introduce measures such as a preferential tax regime to attract enterprises to expand their business in Hong Kong, and to increase storage and trade volume of commodities.

32. Green shipping and aviation is a global trend. The Government will nurture industrial development of sustainable aviation fuel and green maritime fuel, and establish a fuel bunkering centre, leveraging the development opportunities in finance, trading and maritime sectors stemming from new energy.

(A) International Financial Centre

33. Hong Kong is an international financial centre, ranking third globally and first in investment environment. The Government will continue with reforms to reinforce and enhance our status as an international financial centre.

Deepen Mutual Market Access and Enrich Offshore Renminbi Business

34. We will continue to enhance the mutual market access regime and reinforce our status as the world's largest offshore Renminbi (RMB) business hub, contributing to the internationalisation of RMB. Key measures include continuously improving our infrastructure and upgrading the Central Moneymarkets Unit to facilitate the settlement of various assets in different currencies by international investors. We will also develop the fixed income market infrastructure by, for instance, setting up a central clearing system for RMB‑denominated bond repurchase (repo) transactions, making RMB sovereign bonds issued in Hong Kong a more popular choice of collateral in offshore markets. We will look to enhance the Cross‑boundary Wealth Management Connect Scheme as well.

35. We will also strive to bolster offshore RMB liquidity and make good use of the currency swap agreement between the HKSAR and our country, enabling the Hong Kong Monetary Authority (HKMA) to better support Hong Kong's economic and trade development; expand the night‑time, cross‑boundary service capability of Hong Kong's RMB Real Time Gross Settlement System to facilitate global settlement in offshore RMB markets; and explore the provision of more diversified channels for obtaining offshore RMB financing.

36. We will provide more RMB‑denominated investment products –

(i) the Hong Kong Exchanges and Clearing Limited (HKEX) to encourage more listed companies to have shares listed in the RMB stock trading counter, and expand the scope of RMB equities;

(ii) to increase issuance of RMB bonds and support issuance of more green and sustainable offshore RMB bonds in Hong Kong;

(iii) to seek support from the Ministry of Finance for boosting the size and frequency of issuing RMB sovereign bonds, and launching offshore RMB sovereign bond futures as soon as possible, in Hong Kong; and

(iv) to actively liaise with the Mainland authorities to expand the Bond Connect (Southbound Trading) as appropriate, including expanding the scope of eligible Mainland investors to non‑bank financial institutions such as securities firms and insurance companies; and enriching liquidity management tools that facilitate offshore investors' investment in onshore bonds by actively exploring and introducing, at appropriate juncture, various bond repo and collateral products and arrangements using onshore RMB bonds.

Further Enhance Our Status as an International Risk Management Centre

37. Hong Kong has the highest concentration of insurance companies and the highest insurance density in Asia. To further strengthen Hong Kong's position as a global risk management centre, the Insurance Authority will initiate a review next year. We will examine capital requirements for infrastructure investment, enriching insurance companies' asset allocation for risk diversification and driving investment in infrastructure such as the Northern Metropolis. We will also continue to invite Mainland and overseas enterprises, including large state‑owned enterprises in the Mainland, to establish captive insurers in Hong Kong.

Further Enhance Our Status as an International Asset and Wealth Management Centre

38. There are 2 700 single‑family offices in Hong Kong, and the industry has predicted that Hong Kong will become the world's largest cross‑boundary wealth management centre by 2028. We will make every effort to attract more global capital to be managed in Hong Kong, including facilitating the opening of new distribution channels for private equity funds through HKEX's listing, and:

(i) collaborating with sovereign wealth funds in regions along the Belt and Road (B&R) – We will strive to collaborate with large‑scale sovereign wealth funds in regions such as the Middle East, in financing the setting up of funds to invest in assets in the Mainland and other regions;

(ii) enhancing the New Capital Investment Entrant Scheme – Effective today, investment in residential properties is allowed provided that the transaction price of the residential property concerned is no less than $50million, with the amount of real estate investment to be counted towards the total capital investment capped at $10million. In addition, investments made through an eligible private company wholly owned by an applicant will be counted towards the applicant's eligible investment with effect from 1 March 2025; and

(iii) expanding the scope of tax concessions – The Government will consult the industry on the proposal to add qualifying transactions eligible for tax concessions for funds and single‑family offices.

Proactively Expand Markets and Deepen Overseas Networks

39. We will continue to actively expand and deepen our overseas networks, including forging financial co‑operation with the Middle East and the region of the Association of South East Asian Nations (ASEAN), organising more international financial mega events, and exploring further collaboration with Islamic markets in the area of finance.

Further Enhance the Securities Market

40. Relevant measures include:

(i) opening up new sources of capital overseas – Exchange Traded Funds (ETF) tracking Hong Kong stock indices will be launched in the Middle East, seeking to attract allocation of capital in the market to Hong Kong stocks;

(ii) striving for more listing of enterprises in Hong Kong – We will leverage the advantages brought about by our mutual access with the Mainland's financial markets to attract international enterprises to list in Hong Kong. We will also encourage large‑scale Mainland enterprises to list here, particularly aiming to have more prominent initial public offerings in the near term;

(iii) optimising vetting of listing applications – The Securities and Futures Commission (SFC) and the HKEX will announce specific measures for further optimising relevant procedures to provide greater certainty regarding the time required for vetting of listing applications; and

(iv) boosting market efficiency – The SFC and the HKEX will boost market efficiency and lower transaction costs, including reviewing the arrangement for deposit of margin, and refining the requirements on placement of margin and collateral.

Provide Convenient Cross-boundary Financial Services Arrangement

41. To promote financial inclusion, we will facilitate members of the public in making cross‑boundary transactions and payments. The HKMA and the People's Bank of China are pushing forward the linkage of fast payment systems in the two places, i.e. the Faster Payment System (FPS) in Hong Kong and the Internet Banking Payment System (IBPS) in the Mainland, to facilitate real‑time, cross‑boundary small‑value payments by residents on both sides; and they will implement the arrangement enabling issuance of bank cards by Mainland branches of Hong Kong‑incorporated banks in the Mainland.

Build an International Gold Trading Market

42. Hong Kong ranks among the world's largest import and export markets for gold by volume. Amidst the increasingly complicated geopolitics, our city's security and stability gives us a clear edge as an attractive place for physical gold storage, driving more gold trading, settlement and delivery activities, and potentially propelling Hong Kong into a gold trading centre. This will spur development of the related industry chain, ranging from investment transactions, derivatives, insurance, storage, to trading and logistic services.

43. The Government will promote the development of world‑class gold storage facilities, facilitating the storage and delivery of spot gold by users and investors in Hong Kong, and driving demand for related services such as collateral and loan businesses, opening up new growth areas of the financial sector.

44. The Financial Services and the Treasury Bureau (FSTB) will set up a working group to take forward the establishment of an international gold trading centre. This will include, among other things, strengthening the trading mechanism and regulatory framework, promoting application of cutting‑edge financial technology, and actively exploring with the Mainland authorities on the inclusion of gold‑related products in the mutual market access programme.

Enhance the Green Finance Ecosystem

45. Hong Kong is a leading sustainable finance hub in Asia. The international carbon market (Core Climate) launched by the HKEX is the world's only carbon market to offer Hong Kong dollar (HKD) and RMB settlement for trading of international voluntary carbon credits.

46. The HKMA will roll out the Sustainable Finance Action Agenda. In addition, the FSTB will launch a roadmap on the full adoption of the International Financial Reporting Standards – Sustainability Disclosure Standards (ISSB Standards) this year, leading Hong Kong to be among the first jurisdictions to align its local requirements with ISSB Standards.

(B)International Shipping Centre

47. Hong Kong is one of the world's busiest and most efficient ports, and ranks fourth in the International Shipping Centre Development Index (ISCDI). The average length of stay of container vessels in the Hong Kong port is 0.95days, about half the average of 1.85days for the world's top 20 container ports, earning our city the reputation as a "catch‑up port" for vessels to make up for delays in other ports.

48. The shipping business is composed of the port sector and maritime services, in which maritime services (including professional services such as ship broking, financing and leasing, maritime insurance, maritime law and arbitration) are the high‑value‑added segment of shipping business and the source of growth, having grown by nearly 40% over the past three years (from 2019 to 2022) in terms of economic contribution. We will step up our efforts in fostering Hong Kong's maritime industry while taking a multi‑pronged approach to consolidate our status as an international shipping centre.

Establish the Hong Kong Maritime and Port Development Board

49. The existing Hong Kong Maritime and Port Board will be reconstituted into the "Hong Kong Maritime and Port Development Board", a high‑level advisory body to assist the Government in formulating policies and long‑term development strategies. To be chaired by a non‑official member, with other members largely from the maritime sector, the new body will be underpinned by dedicated staff to undertake research and publicity work. Additional funding will be provided to enhance its research capabilities, strengthen its Mainland and overseas promotional work and step up manpower training, supporting the Government in policy implementation more effectively and promoting the sustainable development of Hong Kong's maritime industry.

Promote Development of High Value-added Maritime Services

50. We will strive to promote the development of high value‑added maritime and professional services. Indeed, the Government has been encouraging more shipping commercial principals and maritime service enterprises to establish presence in Hong Kong by providing tax exemptions for ship leasing business and offering half‑rate tax concessions for marine insurance, ship management, ship agency and ship broking. We will continue to boost Hong Kong's maritime strengths. Relevant measures include:

(i) enhancing and promoting tax concessions – To strengthen the local maritime ecosystem, we will step up promotion of existing tax concessionary measures for maritime services and enhance the preferential tax regime (including introducing new tax deduction arrangements for ship lessors pursuant to international tax rules);

(ii) attracting maritime service enterprises to establish presence in Hong Kong – We will encourage leading or high‑potential marine insurance business operators to establish presence in our city to broaden the range of marine insurance products; and

(iii) developing maritime services talents – We will strengthen collaboration with international marine insurance organisations to promote the training of marine insurance talents, and expand the scope of the Maritime and Aviation Training Fund to cover more green energy courses, marine insurance examinations, and others.

Advance Development of Green Maritime Centre

51. We will develop Hong Kong into a green maritime centre through:

(i) promoting the green transformation of registered ships – The Marine Department earlier this year began offering cash incentives to ships meeting relevant international standards on decarbonisation, and it will step up promotion of this initiative;

(ii) developing a green maritime fuel bunkering centre – We will promulgate the Action Plan on Green Maritime Fuel Bunkering by the end of this year. We will take forward the related infrastructural development such as green maritime fuel bunker terminals, promote port emissions reduction, offer incentives to encourage green maritime fuel usage, co‑operate with ports in the GBA, and construct a green shipping corridor with major trading partners; and

(iii) offering green fuel bunkering facilities – We will provide green ships with smart information concerning navigational safety, and enhance the ship monitoring systems to ensure safety during fuel bunkering.

Create a Commodity Trading Ecosystem

52. Commodities including metals and minerals account for more than half of the global shipping trade volume. Shipowners and commodity traders are the key users of shipping routes and maritime services. Their presence and operation in Hong Kong can drive the maritime services industry, and boost demand for related financial and professional services such as hedging activities of related futures products, conducive to consolidating and enhancing Hong Kong's status as an international financial, shipping and trade centre. We will explore the introduction of tax concessions and support measures to attract relevant enterprises in the Mainland and overseas to set up businesses in Hong Kong, building a commodity trading ecosystem in our city.

53. There has been an international commodity exchange expressing its intention to establish accredited warehouses in Hong Kong for storage and delivery of commodities, including non‑ferrous metal products. We will capitalise on this opportunity to establish relevant supporting facilities so as to attract Mainland enterprises to engage in commodity trade, especially of non‑ferrous metal, in Hong Kong, further expanding the demand for our maritime and trade services.

Develop the Smart Port and Conduct International Promotions

54. The Government will complete installation of a port community system next year. It will be equipped with functions such as shipment tracking, real‑time transport information, electronic information and document retrieval, and port data analysis, enabling the flow and sharing of data among stakeholders in the maritime, port and logistics industries.

55. The Government will also organise more major events with international maritime organisations and enterprises to showcase to the world Hong Kong's maritime strengths.

Expand High Value-added Logistics Services

56. We are taking forward the Action Plan on Modern Logistics Development, and will release four quality logistics sites for industry to develop modern, high‑end, multi‑storey logistics facilities. The findings of the planning study on the development of modern logistics clusters in the Hung Shui Kiu/Ha Tsuen New Development Area (NDA) will be published next year.

57. The Government will continue to strengthen co‑operation in the logistics sector with the western part of Guangdong and other neighbouring areas, making good use of the Hong Kong‑Zhuhai‑Macao Bridge (HZMB) to expand the catchment area of our cargo services and facilitate more goods to go through Hong Kong.

(To be continued.)

CE's speech in delivering "The Chief Executive's 2024 Policy Address" to LegCo (2)

II. Steadfastly and Successfully Implement "One Country, Two Systems" and Strengthening Our Governance Systems

(A)Fully and Faithfully Implement the Principle of "One Country, Two Systems"

Optimise the Institutional Strengths of "One Country, Two Systems"

12. The institutional advantages of "One Country, Two Systems" are numerous. Whether Hong Kong was fighting against the pandemic, tackling economic challenges, or seeking development opportunities, the Central Government always stands by Hong Kong and supports Hong Kong through a multitude of facilitation measures, ensuring our long-term prosperity and stability.

13. Under the principle of "One Country, Two Systems", Hong Kong is rooted in "One Country" and enjoys the benefits of "Two Systems", enabling Hong Kong to serve the country's needs with its own strengths. Hong Kong boasts both national and international advantages, enjoying the benefits of policies, guarantees and opportunities of our country. Hong Kong is an international city fully open to the world, underpinned by a capitalist system, with free flow of capital, people and information. It adopts a common law system, maintains its own legislative and judicial systems, laws, tax regime, currency and financial system, and is a separate customs territory. Hong Kong is a global metropolis.

14. We will continue to fully, faithfully and resolutely implement the principles of "One Country, Two Systems", "Hong Kong people administering Hong Kong" and a high degree of autonomy. We will continue to fully leverage the institutional strengths of "One Country, Two Systems" for sustaining the prosperity and stability of Hong Kong, contributing to China's building into a great country and realising the great rejuvenation of the Chinese nation.

Safeguard National Security

15. Security and development work together like the two wings of a bird. Development requires a safe social environment. In March 2024, the Hong Kong Special Administrative Region (HKSAR) fulfilled the constitutional responsibility and historic mission of enacting local legislation for Article 23 of the Basic Law. The newly enacted Safeguarding National Security Ordinance (SNSO) achieves convergence, compatibility and complementarity with the Hong Kong National Security Law (HKNSL). Together they form a comprehensive legal system and enforcement mechanism for safeguarding national security. But threats to national security may spring up any time. We must stay vigilant and put up our guard.

16. Public officers are duty bound to safeguard national security. Section 8(3)(a) of the SNSO stipulates that if the law of the HKSAR confers any function on any person, the function is to be read as including a duty to safeguard national security. Section 114 stipulates that public servants must provide assistance for the work on safeguarding national security. All bureaux and departments must review their codes, guidelines and procedures to ensure compliance with these provisions.

17. It is of utmost importance that our people safeguard national security of their own accord. Since opening in August, the National Security Exhibition Gallery has been well-received by the public. We will train up tutors at district level for promotion of national security education in the community. Thematic exhibitions will be rolled out by the gallery to dovetail with the 10th National Security Education Day next year. The Education Bureau (EDB) will also update the Curriculum Framework of National Security Education.

Foster Patriotic Education

18. The Working Group on Patriotic Education has formulated promotion strategies and measures for supporting the organisation of more activities such that the spirit of patriotism can take root in society. Next year marks the 80th anniversary of victory in the War of Resistance. The Government will host commemorative activities to strengthen the sense of patriotism. The EDB will organise a range of joint school and cross-sectoral activities under the "Love Our Home, Treasure Our Country 3.0" series, continue to enhance Chinese History and national geography education in primary and secondary schools, and enrich patriotism and history elements in Mainland exchange programmes.

Promote Chinese Culture

19. Established in April, the Chinese Culture Promotion Office earnestly promotes Chinese culture, including planning for the construction of a museum to showcase the development and achievements of our country, and a new Chinese Culture Experience Centre. It also continues to organise the Chinese Culture Festival and exhibitions of the General History of China series.

(B)Strengthen Our Governance Systems

20. Since taking office, the current-term Government has taken forward various reforms on cross-disciplinary co-ordination and governance culture so as to strengthen our governance systems. Apart from introducing three Deputy Secretaries of Department to strengthen leadership and cross-bureau co-ordination, I have set indicators for specified tasks and monitored their progress and outcomes, creating a government culture focusing on actions and delivery of results. Moreover, we have updated the Civil Service Code to spell out the core values and standards of conduct that civil servants should uphold, and introduced a mechanism to mobilise the Government at all levels to enhance emergency response. The Government will deepen the reforms and continue to strengthen our governance systems.

Enhance the Cross-bureau Co-ordination Mechanism

21. We will enhance the leadership and cross-bureau co-ordination mechanisms, and fully leverage the leading and co-ordinating functions of Secretaries and Deputy Secretaries of Department. We will establish the following committee and working groups:

(i) The Committee on Education, Technology and Talents, chaired by the Chief Secretary for Administration with the Secretary for Education, Secretary for Innovation, Technology and Industry, and Secretary for Labour and Welfare, as members, will co-ordinate and promote the integrated development of education, technology and talents. It will also expand connections, attract and cultivate talents, foster the development of technologies, and promote Hong Kong as an international hub for high-calibre talents;

(ii) The Working Group on Developing Low-altitude Economy, led by the Deputy Financial Secretary, will kick-start projects with application prospects, formulate development strategies and action plans on the low-altitude economy, as well as take forward regulatory reform and plans for related infrastructural facilities;

(iii) The Working Group on Developing Tourist Hotspots, led by the Deputy Chief Secretary for Administration, will strengthen cross-departmental co-ordination and leverage community efforts, identifying and developing tourist hotspots of high popularity and with strong appeal in various districts; and

(iv) The Working Group on Promoting Silver Economy, led by the Deputy Chief Secretary for Administration, will formulate measures to expedite the development of the silver industry in line with the daily needs of the elderly.

Strengthen Governance Capabilities of the Civil Service

Strengthen Civil Service Management

22. Efforts in strengthening the reward and punishment system in the past two years include launching the Chief Executive's Award for Exemplary Performance, streamlining the mechanism of directing officers with persistent sub-standard performance to retire, improving the efficiency and effectiveness of handling disciplinary cases. We will review the Public Service (Administration) Order and Public Service (Disciplinary) Regulation to enhance the civil service disciplinary mechanism, and will consult with the Public Service Commission on the preliminary proposals next year.

National Studies and International Training

23. The civil service must have a full grasp of the policy objectives and strategies of our nation. The Government will organise seminars and learning activities on the important policies, reports and so on delivered by the Central People's Government (CPG). We will also arrange for the middle, senior and directorate level officers to receive training at renowned institutions in the Mainland and overseas to help foster their sense of national identity and develop global perspectives.

24. With the support of the CPG, the HKSAR Government will continue to send officers to work in various offices of the United Nations through a dedicated programme.

Civil Service Exchange Programme between Hong Kong and the Mainland

25. The Government will collaborate with the Mainland cities in the GBA, as well as Beijing, Shanghai, Chongqing, Wuhan and Hangzhou to launch mutual civil service exchange programmes.

Launch the Governance Talents Development Programme

26. The Civil Service College will launch a Governance Talents Development Programme to further develop governance capabilities of officers at leadership ranks. The college will also enhance its internal research and training capability building.

Digital Transformation of Public Services

27. The Digital Policy Office (DPO) will endeavour to fortify information systems of the Government and public organisations. The DPO will also spearhead the pilot use of a locally developed generative artificial intelligence (AI) document processing copilot application in government departments. About 20 digital government and smart city initiatives will also be launched this year, including using blockchain technology for issuing electronic certificates for designated civil service examinations and electronic licensing by the Fire Services Department, as well as the use of AI for handling public enquiries.

Bolster Security of Computer Systems of Critical Infrastructure

28. The Government will require critical infrastructure operators to undertake obligations to protect their computer systems, so as to reinforce their resilience against cybersecurity challenges. A bill will be introduced later this year.

(To be continued.)