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Financial Secretary John Tsang
The Federal Open Market Committee of the US Federal Reserve, as everyone has expected, decided last night to raise interest rates by 0.25 percentage points, the first rate hike in nearly a decade. This is an indication that the FOMC is confident that the US economy would continue to grow but the outlook of other advanced economies is not exactly rosy. Export-dependent Asia has seen an almost across-the-board slowdown due to sluggish demand from these advanced economies in the West. A strong US dollar and weak demand will have an adverse impact on the many emerging economies that rely heavily on oil and commodity exports.
The conflicting monetary policies among the Federal Reserve and other major central banks can also induce further volatilities in the global financial markets.
Clearly, the world economy is in dire need of a new and strong driving force in the 21st century. And I believe the ambitious concepts of the "Belt & Road" initiative, spearheaded by President Xi, can be that much-needed force, through the promotion of co-operation in terms of policy co-ordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds among the 60-plus economies spanning Asia, Europe and Africa.
The widespread interest in, as well as the enthusiastic response to the establishment of the Asian Infrastructure Investment Bank, or the AIIB, underlines that belief.
I say this is the right place because Hong Kong, with our unique advantages under the "one country, two systems" framework, has all it takes, from our world-class market infrastructure, our unparalleled business network to our robust legal system, for realising fully the enormous possibilities presented by the "Belt & Road" initiative.
This grand vision will engender stronger economic and trade activities in our region, as well as soaring investment in infrastructure, such as railways, highways, ports, power plants and whatnot. As an international financial centre and the world's largest offshore Renminbi business centre, Hong Kong has the experience and we have the expertise as well as the connections to serve as the fundraising and financial management hub for the "Belt & Road" initiative.
In that regard, we should not underestimate the potential of the promising market of Islamic financial services, given the large Muslim population living along the "Belt & Road". Hong Kong has issued two highly successful Shariah-compliant sukuk in the last two years. This is a clear demonstration of our capabilities in this specialised financial offering as well as the confidence international investors have in Hong Kong's economic fundamentals.
With a deep pool of talented professionals in the fields of accounting, law, architecture, engineering management and what else, Hong Kong can also contribute to and benefit from the large number of consultancies as well as from the management and operation of infrastructural projects that may arise.
For Hong Kong to capitalise totally on the wealth of opportunities of the "Belt & Road" initiative, we need to move proactively on the G2G level to strengthen our ties with the economies along the "Belt & Road", and to gain a better understanding of the political, economic and cultural make-up of the many emerging markets dominating the landscape along the "Belt & Road".
Financial Secretary John Tsang gave these remarks at the Academia International Conference on Hong Kong & the World under the Belt & Road Initiative on December 17.
