Hong Kong must be ‘3 centres, 1 hub’ as stated in China’s third plenum: Paul Chan (2024)

Hong Kong must position itself as an international centre for finance, shipping and trade as well as a prominent talent hub under plans laid out at China’s third plenum, the city’s finance minister has said.

In a blog post on Sunday, Paul Chan Mo-po wrote that Hong Kong’s strategic position as “three centres and one hub” was clearly stated in a resolution endorsed by the Communist Party’s 20th Central Committee, and fulfilling that role was something the city “must do well in the future”.

He called on the government to “think more deeply” about how to implement Hong Kong’s strategic positioning in relation to mainland China and the city’s integration into the new development pattern of the country to contribute to Chinese-style modernisation.

The Central Committee resolved last month to promote high-quality development and transform the nation into a modern socialist country at its third plenum, a gathering to lay out an economic road map for the medium term.

Chan said the resolution mentioned leveraging the institutional advantages of Hong Kong’s “one country, two systems” governing principle to consolidate and enhance the city’s status as an international financial, shipping and trade centre.

The three centres would have their own focuses while mutually supporting one another, with growth in the innovation and technology, trade and shipping industries stimulating demand for services and financial products, he added.

The city government would also develop a “headquarters economy” to attract enterprises to set up regional or international headquarters in Hong Kong, tapping into its strategic location in the Greater Bay Area, he added.

The bay area links Hong Kong and Macau with nine cities in Guangdong province, a plan by Beijing to transform the region into an economic powerhouse.

Chief Executive John Lee Ka-chiu held a study session last Friday with top government officials to look at the issues listed in the third plenum’s resolution including their implications for the city’s future development.

Lee had earlier called on officials to develop a thorough understanding of the “spirit” of the third plenum, and uphold it in their daily work.

In his blog post, Chan said Hong Kong needed to have greater market depth as a financial centre, offer a wider range of products and functions, and conduct more exchanges with different regions to expand its sources of funds.

“The financial market is connected to the mainland as well as the world, and can continue to play the role of a ‘test bed’ and ‘firewall’ in the process of China’s deepening financial reform, helping the country to promote high-level opening up of the financial sector,” he said.

The city should also fully leverage the role of an offshore renminbi business hub to promote the internationalisation of the yuan.

Hong Kong had the biggest offshore pool of yuan as of the end of June, at 1.06 trillion yuan (US$147.9 billion), according to the latest statistics from the Hong Kong Monetary Authority.

As a trade centre, Hong Kong should help mainland businesses go global in their production and supply chain, acting as a one-stop shop offering services ranging from supply chain management to professional consultation, Chan said.

“Especially as more mainland enterprises seek international development and set up production lines overseas to better serve the global market, this will generate more new trade service needs, bringing greater opportunities to Hong Kong,” he explained.

Chan also said the city should focus on growing sectors such as smart shipping, green shipping and professional services in the maritime industry, reiterating an action plan laid out by the government last December.

The plan called for Hong Kong to boost its status as a global shipping centre through tax incentives and innovation.

The third plenum resolution document also highlighted Hong Kong’s strength as a talent hub with many top universities and a society that blended Chinese and Western cultures.

Chan said the government’s various talent schemes had drawn more than 340,000 applicants to the city so far since late 2022.

Of these, 210,000 were approved and 140,000 successful applicants had already arrived in the city.

“More high value-added positions brought in by active investment promotion will also help us retain and use this talent well,” he said.

Chan said he was confident that Hong Kong would attract more international talent to its shores, as long as the government had a “firm goal and clear thinking” and continued to improve policies and living support for such talent development.

Although the international political and economic environment was complex and volatile, Hong Kong would strive to fully use its “greatest advantage” as a city governed under the one country, two systems principle, he said.

Experts said the message to prioritise the three centres out of the eight listed in Beijing’s 14th five-year plan reflected the strategic importance of finance, trade and shipping to Hong Kong.

Lau Siu-kai, a consultant with the Chinese Association of Hong Kong and Macau Studies, said becoming a talent hub was also important since Hong Kong and the mainland were both intent on promoting new quality productive forces.

“Beijing expects Hong Kong to become a talent reservoir for the country and hopes that Hong Kong can attract top-end talent from the US and other Western countries,” he said.

“Many Chinese scientists and scholars are leaving the West because of political and security reasons, and Hong Kong might be a destination for some of them.”

Business academic Terence Chong Tai-leung said that while Hong Kong had always enjoyed a strong standing as a financial hub, the city played a more passive role in developing into a trade and shipping centre.

“Trade needs to flow both ways, and we are dependent on the performance of [the mainland’s] imports and exports. Since we are already a tariff-free port, we cannot lower taxes any more to be competitive,” he said.

Chong noted that boosting insurance options for the maritime industry could be a potential means of growing the city as a shipping hub.