Hong Kong's specific inclusion in the national 11th Five-Year Plan (2006-10)
is generally well received here in the Special Administrative Region (SAR).
There is a common consensus that since Hong Kong is part of China, which is the
growth engine for the region, if not for the global economy, we should reserve a
good seat on the "China economic express." Rafael Hui Si-yan, chief secretary
for Administration of the Hong Kong Special Administrative Region, recently
articulated his concern that Hong Kong might risk being "marginalized." This
sparked a heated debate in Hong Kong, which served to consolidate the
determination that Hong Kong must shape up to face the challenge of integration
into the national economy.
Subjective determination apart, a meaningful economic integration entails
quite a few problems, both on the part of every level of government on the
mainland as well as that of Hong Kong. Hong Kong is commonly recognized as the
world's most free economy in which the government deliberately refrains from
meddling with the market. It does not even possess the usual macro-management
tools common to other market economies such as fiscal policy, monetary policy,
industrial policy, and exchange rate policy.
For several decades, Hong Kong has thrived like a single-cell amoeba, freely
moving around, exchanging resources with the environment. Now it has had to
adapt itself as part of a composite life form, such as an arm to the whole body,
serving certain specific functions, synchronizing with the whole entity.
In economic terms, Hong Kong now has to position itself in the national
economy, working out an elaborate scheme of division of labour and co-operation
with various levels of government on the mainland. This is heresy to the
long-held positive non-interventionist dogma, and has left most decision-makers
in Hong Kong though they can somehow appreciate the necessity unsure how to
proceed. To some die-hards, this may amount to losing a large degree of economic
integrity and even economic autonomy.
In a recent seminar for Hong Kong civil servants, Xu Lin, deputy
director-general of the Department of Development Planning of the National
Development and Reform Commission, stressed that under the Basic Law and the
"one country, two systems" principle, the planning and arrangement of
socio-economic development in Hong Kong should be formulated by the Hong Kong
It may take a while for the Hong Kong SAR government to gradually work out
the strategy and sell it to its citizens. In a pluralistic society with elected
legislature, this is not a very easy task. Even today, many people still insist
that Hong Kong should strive to revive a strong industrial base to maintain its
economic integrity, not to mention giving up a long-held economic dogma.
Without directly confronting and assailing the positive non-interventionist
dogma, the Hong Kong SAR government can still be more proactive within its
existing parameters. Breaking down barriers to trade, investment and information
exchange, for instance, is completely in line with free trade principles, and
there are a lot of things to be done in these areas.
To cite a few concrete examples, we may question whether Hong Kong should
cling to its communications system with its expensive roaming charges on
telephone conversations during frequent travel on the mainland. Another recent
debate centres on whether Hong Kong's power supply should be open to the South
China Grid. Further, low priority was previously given to linking the regional
express in Shenzhen to Guangzhou, and then to the whole country. Realizing the
significance of integration, the priority can now be lifted to build a dedicated
high-speed railway for this purpose.
Attracting external investment has long been accepted as one of the basic
roles of the Hong Kong SAR government. The Hong Kong Trade Development Council,
a government-funded body with an extensive network of overseas offices, was
given this function as early as 1968 when it was first set up. On top of that,
the Hong Kong SAR government has a separate network of economic and trade
offices and an Invest Hong Kong Department. Over the years, Hong Kong has always
adopted a take it or leave it attitude, confident that its superior investment
climate and advanced infrastructure would be sufficient to attract overseas
investors. All it has to do is to provide information and facilitate the
Despite this passive official attitude, Hong Kong is today unquestionably the
No 1 centre for the regional headquarters of multinational corporations in the
Asia-Pacific region, and is by far the No 1 choice in China, with Shanghai as No
2 at quite a distance behind. It is estimated that there are about 7,000
multinational regional headquarters, regional offices and local offices in the
SAR. As an indication of its degree of globalization, Hong Kong hosts 107
consulates and consulates-general offices, more than any other city in the
world; more than even New York, with only 93 consulates.
Hong Kong is the world's 11th largest banking centre. Our service sector
constitutes a remarkable 88 per cent of the GDP, with a highly sophisticated
banking sector and good communications links, making Hong Kong the best location
for regional and national headquarters anywhere in the world.
With more aggressive efforts to promote Hong Kong as the most convenient
gateway to China, we can attract many more overseas companies to set up their
regional operations here, enhancing Hong Kong's position as a financial centre,
logistics centre, and commercial service centre, as envisaged in the national
11th Five-Year Plan, revitalizing the economy, and creating more high-value
jobs. On top of that, commercial tourism, also high-value, will get a big boost.
Also in the plan, mainland enterprises are encouraged to invest and diversify
their operations overseas. What other cities can surpass Hong Kong as a
springboard and an international operations centre? Many mainland enterprises
urgently want to be listed here, and to use Hong Kong's superb trade and
commercial service infrastructure to house their headquarters for central
management, finance and research and development, and to leapfrog into overseas
markets. A convergence of major mainland enterprises and multinationals in Hong
Kong will be the catalyst for plenty of business opportunities both for Hong
Kong and for the whole country.
On the mainland, this model is commonly called the "headquarters economy."
Developing Hong Kong along these lines does not require any unnecessary
government intervention as all the elements are already there, but it is
definitely supportive of the 11th Five-Year Plan in the most unique Hong Kong
way, and will create a win-win situation for all parties concerned.
The author is a member of the Chinese People's Political Consultative
Conference from Hong Kong.
(China Daily 04/12/2006 page4)