Beijing's unfailing support for HK
Updated: 2017-03-16 09:33
Endless political wrangling has clouded Hong Kong's prospects for many years. It has also raised concerns about the city losing its significance in the national development strategy. Some conspiracy theorists have even suggested the central government is boosting the development of Shanghai as an alternative international financial center.
Yet Premier Li Keqiang has, in effect, disproved such nonsense with his well-received revelation on Wednesday that the central government is considering setting up bond market links between Hong Kong and the mainland this year. Dubbed the Bond Connect, the proposed bond market links will allow international investors to trade in the mainland bond market and mainland investors to trade in Hong Kong's via a platform set up between the two sides. Hong Kong will be the first to benefit from such an arrangement, the premier told a news conference at the close of the annual session of the National People's Congress.
The move - which allows Hong Kong again to play a key role in the nation's latest financial opening-up strategy - suggests the central government will maintain its confidence in the SAR. It must believe the SAR can effectively safeguard the sovereignty, security and development interests of the nation by upholding the "One Country, Two Systems" principle and the Basic Law. This is despite some radical groups advocating separatism in the city.
The plan is further testament to Beijing's never-failing support for Hong Kong. Together with the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect launched previously, the Bond Connect will help further strengthen Hong Kong's status as an international business center by expanding its financial markets, which so far rely on equity financing. Hong Kong's role as a premier hub for offshore yuan businesses will also receive a major boost. Its yuan liquidity pool is likely to expand when the Bond Connect scheme is launched.
What is more significant is that Beijing's latest move signals Hong Kong will continue to play a significant role in the country's further economic reforms and integration into the global economy. This is, understandably, based on the SAR being able to help safeguard national interests while striving for its own prosperity and stability.
It is believed that cross-boundary trading will expand into other financial products such as exchange traded funds (ETFs) and commodities. Hong Kong has much to gain from such cooperation.
(HK Edition 03/16/2017 page9)