Hong Kong’s Role in International Co-operations

1. think GLOBAL think HONG KONGAdvantages of Pearl River Delta Plus:Leveraging Hong Kong Service Platform to SupportCross-border Business Operation Hong Kong’s Role in International Co-operations Dr. Jonathan Choi Chairman, Hong Kong – Japan Business Co-operation Committee 15 May 2012

2. HK-PRD: Geographic Superiority

3. HK-PRD: Inseparable Relations • Pearl River Delta (PRD) • The first economically liberalized region sinceChina’s Reform and Opening Upin 1979 • Investment of HK based companies • Foreign direct investment • Skilled workforce • HK-PRDChina's economic growth hub

4. Guangdong-Mainland’s economic growth hub • Guangdong has strong manufacturing industry and export capabilities • Guangdong is in the critical stage of upgrading and transformation

5. HK-PRD's Role between China and Overseas:Increasingly important • Gradual shift of global economic focus to the East • PRD enterprises grow rapidly and develop high value-added industries • HK’s prominent superiority: Infrastructure, Finance, Professional services, etc. • Continuous policies in strengthening HK-PRD co-operation • The National 12th Five-Year Plan • More specific and focused separate chapter for HK for the first time • Specifies development of new district zones (Qianhai, Nansha and Hengqin)  closer ties among Guangdong, HK and Macau • Vice Premier Li Keqiang’s 36 new policy measures  HK and Mainland co-operations • Supplement VIII to CEPA: • Further enhance economic, trade and financial co-operations between Mainland and HK • Helps accelerate HK’s professional services in entering Mainland market • Acts as key platform in further promoting the HK-Guangdong economic integration • Outline of Plan for Reform and Development of the PRD 2008-2020 • Framework Agreement on Guangdong-Hong Kong Co-operation • Regional Co-operation Plan on Building a Quality Living Area

6. HK-PRD Region: Integration of Infrastructure Network • Promote co-operation of aviation industry • Improve coordination mechanism • Perform airspace management mechanism • Strengthen HK-PRD transport networks • Increase frequency of HK-PRD shipping routes • Provide efficient and private services: yachts and aircrafts • Provide speedy commercial aircraft and helicopter services • Strengthen the role of HK as a hub of transportation • HK-Zhuhai-Macau Bridge (3-hour radius) • Guangzhou-Shenzhen-HK Express Rail Link (“1-hour living circle”) • Enhance electronic clearance technologies

7. HK as the Logistic Gateway • World-class cross-boundary infrastructure • Highly efficient customs services and competitive advantages in • Handling high value goods • Providing high value-added services • Satisfy needs of foreign sales and domestic distribution of PRD-based factories • Integrate HK’s professional business services with Guangdong’s strong export capabilities • Seize the development opportunities arising from the rapid growth of Mainland and Asian economy

8. HK’s roles as Offshore RMB Centre and Asset Management Centre • CEPA VIII • Support Mainland banks to make use of HK's international financial platform to develop international businesses • Support HK insurance companies to enter the market through setting up business institutions or capital participation HK’s Advantages • World’s largest offshore RMB centre – continue to expand and reach new milestones, increase liquidity and maturity • Free capital flow • Market-determined RMB exchange rates • Important entrepôt of Mainland China • Further advantages - Extend settlement periods  cover trading hours in Europe and the U.S.

9. HK as a Financial Centre - Further Strengthened Role and Functions Third Quarter of 2011 – HK handles 90.1% of the world’s RMB trade settlement • Expansion of the RMB trade settlement scheme to entire country • Support HK enterprises’ use of RMB for direct investment in the Mainland • Introduction of a RMB QFII scheme for investing in the Mainland’s securities markets • Expansion of number of enterprises issuing RMB bonds in HK and scale of their bond issuance Hong Kong’s RMB Deposits, Remittances and Clearing Transactions Source: CEIC

10. Enhance Regional Integration HK as platform for East Asian Economic Co-operations • Economic relations with its neighboring economies, including Japan, have deepened with time • Perfect platform for Japanese companies esp. SMEs entering the southern China market • Mainland enterprises  HK-PRD connections Japanese market • HK-PRD: Japan’s economic interaction with China and the neighboring regions • A more important role in promoting East Asian regional economic co-operation • A platform in the future financial development in East Asia

11. Enhance Regional Integration HK as platform for East Asian Economic Co-operations • HK Government has conveyed the wish to join the ASEAN-China Free Trade Agreement (ACFTA) • Central government also supports HK to join ACFTA • Make good use of HK’s connections with Asian countries • HK can strengthen economic ties between China and ASEAN • HK plays a strategic role to the region as • International financial centre • International business centre • Trading hub • CGCC will organize a forum on East Asian Regional Co-operation in July 2012 • 10 + 1 (ASEAN + CHINA) • 10 + 3 (ASEAN + CHINA, JAPAN, S. KOREA)

12. THANK YOU!