Standing hand-in-hand to deal with hardships

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By Donald Tsang (China Daily)
Updated: 2008-12-18 07:46

This year, our country marks the 30th anniversary of the reform and opening up process that has had a profound impact not just on China, but also on the rest of the world .

On Dec 18 1978, the Third Plenary Session of the 11th Central Committee of the Communist Party of China was convened in Beijing, which resolved to shift the focus of work to modernization. Put simply, the long-held policy based on the principle of class struggle would give way to one that was geared towards economic construction.

This was a profound and historic decision. The reform and opening up policy provided the Chinese people with an opportunity to innovate and give their best. Over the past 30 years, the mainland has enjoyed rapid economic growth, with average annual GDP growth of 9.88 percent. Hundreds of millions of people have been lifted out of poverty. Living standards have improved significantly, which has laid a solid foundation for our country to make further progress.

The reform and opening up has also brought China back into international reckoning and enabled it to contribute to global development.

At the same time, China has been committed to maintaining peace and stability in the region and globally. In the future, China will continue to fulfill its international obligations as a world power promoting the welfare of mankind and working with other countries to build a harmonious world.

The mainland's reform and opening up and the rapid development of Hong Kong are closely intertwined, and the tremendous changes in our country have had an enormous impact on Hong Kong. Hong Kong has also been an active participant in the process and has made important contributions to our nation's development.

Earlier this year, I met Wang Yang after he assumed his post as Guangdong Party Committee Secretary. We discussed how to boost cooperation between Guangdong and Hong Kong. Wang said Hong Kong had made valuable contributions to the development of Guangdong, as well as the reform and opening up of our country. The first wave of China's reform drive began in Guangdong, which made good use of Hong Kong's position as an international financial, trade and shipping center to drive its economic development. As a result, Guangdong became a major engine of the country's reform.

Hongkongers were the pioneers of investing on the mainland. They were the first to establish joint ventures. Hong Kong's businesspeople were often sailing in uncharted waters. They experienced many difficulties and had to take substantial risks.

Today, Hong Kong's realized direct investments on the mainland have reached almost $320 billion - about 40 percent of the mainland's total external direct investment. In Guangdong alone, some $112 billion has been invested - which is almost two-thirds of all direct external investment in the province. Hundreds of thousands of jobs have been created throughout the country by these investments.

Capital investment aside, Hong Kong has also supplied management experience, international business networks and market economy concepts to the mainland. This has helped our country develop its own market mechanisms, and provided a useful reference for the ongoing economic reform.

Over the past 30 years, the mainland has exported goods worth more than $1,000 billion through Hong Kong - making Hong Kong the most important source of foreign exchange earnings for our country.

Since the 1990s, increasing numbers of mainland enterprises have raised funds through public listings in Hong Kong, which demonstrates the indispensable role that Hong Kong has played in the "going out" process of mainland enterprises. This has also strengthened Hong Kong's status as an international financial center.

The contributions by Hong Kong entrepreneurs go far beyond their investments on the mainland. Many have devoted their knowledge, expertise, time and personal wealth to promote the development of education and welfare on the mainland. I believe their spirit of philanthropy has inspired similar endeavors by their mainland compatriots.

Without doubt, Hong Kong has benefited greatly from the mainland's reform and opening up. In the early 1980s, rising land and labor costs put considerable pressure on our international competitiveness.

The mainland's reform and opening up provided timely relief. Many Hong Kong manufacturing companies moved to the mainland, in particular the Pearl River Delta region, to take full advantage of low production costs and thus enhance the competitiveness of their products.

At the same time, Hong Kong turned its focus to trade and financial services. Acting as an intermediary between the mainland and the world, Hong Kong prospered from the mainland's rapid economic growth and successfully transformed into one of the region's major business and financial services hub.

This transformation enabled Hong Kong - a developed economy - to sustain impressive average annual GDP growth of 5.7 percent to outpace the developed economies in Europe and North America. Per capita income in Hong Kong rose from less than $4,000, 30 years ago to more $30,000 today.

The role of Hong Kong will not diminish as our country continues to develop. Rather, our role will become more crucial.

First, Hong Kong will continue to play a vital role as the mainland continues to enhance its economic structure and merge with the global economy. As an international trading port, services hub and innovation centre, Hong Kong can help the mainland develop modern service industries including trading, logistics, convention and exhibition, information technology, accounting, legal and engineering services.

Hong Kong can also help mainland enterprises to fully utilize overseas markets to integrate into the world economy. There is much room to make use of Hong Kong's advantages in service industries, international networks and innovative capabilities to serve our country even better.

Second, almost every major economy has a world-class financial center. Hong Kong is not only a fundraising center for mainland enterprises, it is also the only international financial center in China.

Hong Kong will seek to encourage more public listings of mainland enterprises, expand its renminbi business, promote asset management and develop the futures market.

Third, global competition today is among regional economies. By complementing each other's strengths, Hong Kong and Guangdong have set a successful example of regional cooperation over the past three decades.

Hong Kong will strengthen cooperation with Shenzhen to build a world-class metropolis under the "One Country, Two Systems". It is also working with Guangdong on a wide range of fronts to transform the Pearl River Delta region into a world-class economic zone, serving as the "flagship" for our country as it competes globally.

Fourth, our country's development requires good education and a vast pool of talent. Hong Kong has an excellent track record in attracting talent from around the world and in providing a high standard of tertiary education.

Over the past 30 years, Hong Kong has helped train thousands upon thousands of business, managerial and administrative professionals for the mainland.

Lastly, given the strength of Hong Kong's legal system, market mechanisms, administrative efficiency, corporate governance, entrepreneurship and city administration, it can help the mainland refine its market economic system, formulate effective public policies and strengthen its city administration, which will provide support for the country's rapid economic development in the future.

Although the world is in the grip of a financial turmoil and facing a recession, the cooperation between Hong Kong and the mainland will not falter. The central government has pledged to back Hong Kong and take effective measures to support it. These measures will not only help Hong Kong face the present challenges, but also help with the continued opening up and reform of the mainland.

In addition, the $586-billion stimulus plan recently unveiled by the central government will not only help sustain the mainland's economic growth, also provide a plethora of business opportunities for Hong Kong enterprises.

Hong Kong and Guangdong will continue to deepen cooperation in the financial and services sectors, as well as cross-boundary infrastructure in order to maximize their regional advantages as we tackle the economic crisis together.

The past 30 years of reform and opening up have been of singular importance to China and the world. Not only has it changed the course of our nation's history, it has also impacted on the economic development of the whole world.

Hong Kong should take great pride in its active and unique role in this process. As the reform and opening up continues, Hong Kong will grasp every opportunity to deepen its integration with the mainland, and make the best use of its competitive strengths to contribute to the development of our country.

The author is the Chief Executive of the Hong Kong Special Administrative Region. The above is an excerpt from his article on China's 30th anniversary of reform and opening up.

(China Daily 12/18/2008 page9)