This year’s Policy Address has put forward the strategy for Hong Kong to play an active role in our country’s Belt and Road Initiative. This Initiative may seem unfamiliar and remote. One may even wonder why Hong Kong has to take part in it, and doubt whether Hong Kong has any role to play in it. Admittedly, the Belt and Road Initiative is still at a preliminary stage pending the finalisation of implementation details, and there will be discussions regarding numerous factors, such as geopolitics and risks, along the way. Nevertheless, if we over- simplify the issue and merely regard our participation in the Belt and Road Initiative as an attempt to compliment or please the Mainland, we may have under-estimated Hong Kong’s competitive edge, and failed to objectively review the current changes in the political and economic development of our country and the world.
First of all, how crucial is the Belt and Road Initiative? During the seven years of long and difficult negotiation in making a final deal for the Trans-Pacific Partnership Agreement Mr Obama expressed his concern over the new political and economic order that may arise from our country’s Belt and Road Initiative.
The Belt and Road Initiative has a wide coverage, spanning Asia, Africa and Europe. Along the route, there are over 60 countries with some 4.4 billion people (63 per cent of the world’s population) with a total economic value of US$21 trillion (29 per cent of the world’s economy). The Initiative sticks to the principles of peace and co-operation, openness and inclusiveness, mutual learning and mutual benefit. Currently, the external trade volume between the Mainland and the region is around US$1 trillion, accounting for some 25 per cent of China’s total external trade volume. The average annual growth rate of external trade is around 14 per cent, higher than those of other regions. From the ratio difference between the said population and trade volume relative to the world, as well as the rapid annual growth rate, we can see the future development potentials in regions along the Belt and Road, and opportunities to take part in the Initiative.
Then why should Hong Kong be a part of it? As a matter of fact, looking back at our history objectively, you can see that Hong Kong has been following the global development trends and the Mainland’s situations, and positioning itself by tapping its own strengths in the past few decades. In recent years, our country has been facing various political and economic challenges, and striving to make a breakthrough. In the face of global economic uncertainty, other countries are also looking for new impetus for economic growth. Many countries, including some Western counterparts, have been eyeing on the Belt and Road Initiative and are exploring if they can benefit from it through participation. Against such a backdrop, why shouldn’t Hong Kong be more proactive in learning more about the Belt and Road Initiative, and think objectively and pragmatically about the roles we can play to explore more career opportunities for Hong Kong people?
Taking, infrastructure as an example, mutual connectivity of infrastructure facilities is one of the highlights of the Belt and Road Initiative, and is believed to be the one area that can be more readily implemented among the “five areas of connectivity”. It is estimated that China has signed infrastructure project agreements worth over US$250 billion with the Belt and Road countries since the announcement of the Belt and Road Initiative in 2013. China has made significant gains, as far as experience and technology are concerned, in major infrastructure projects in recent years, especially cross-region projects. However, as projects of the Belt and Road Initiative target global investors, they have to adopt international standards and require world-class professional services for quality assurance. Hong Kong’s construction industry and related sectors, therefore, have certain advantages in this regard. We have been fully open to the world for decades, and have adopted the international levels in terms of design, standard, technology, operation and management. We have a lot of professionals well versed in international standards and rules, market tendering, financing, multi-disciplinary project management and operation who can utilise their expertise in these projects.
Taking international standard as another example, the Belt and Road Initiative emphasises “facilities connectivity”, the pre-requisite of which is uniformity of construction standards. Since many Silk Road countries are still at the early stages of building their large-scale infrastructure, they have not yet established their own construction standards, but have adopted those of the neighbouring or Western advanced countries instead. Chinese construction enterprises have been actively “going global” in recent years, yet only few of them have participated in large-scale infrastructure projects overseas. The Ankara-Istanbul high-speed railway line in Turkey, despite Chinese involvement, still adopts the standards of the European Union (EU), showing that Chinese standards have not yet been internationally recognised. In view of this, the Mainland is planning to speed up the implementation of the “Made in China 2025” plan, which aims to enhance the creativity and quality of Chinese manufacturing, standards and branding. The Belt and Road Initiative provides an opportunity to align Chinese standards with the international ones, as the “mutual access” of Silk Road infrastructure requires the adoption of universal standards and requirements. In this regard, Hong Kong’s construction industry has been following the international standards for many years. With significant understanding of and experience in the British standards in the past and the EU standards nowadays, we can play a bridging role in the internationalisation of China’s construction standards.
In addition, Hong Kong’s professional services also have advantages in other areas such as exploring international financing channels, as well as providing risk management and dispute resolution for infrastructure projects along the Silk Road. Even with a number of existing financing channels like the Asian Infrastructure Investment Bank, the New Development Bank BRICS, the Silk Road Fund or other pools of funding, there is still significant demand of financing from the infrastructure projects along the Belt and Road. As an international financial centre, Hong Kong has significant advantages in providing financing services for enterprises and infrastructure projects along the Silk Road. On the fronts of risk management and dispute resolution, Hong Kong, with Chinese being an official language, is the only jurisdiction in China that adopts the common law. It also has an enormous pool of world-class legal professionals. As for arbitration, a number of international and Mainland arbitration institutions have set up arbitration centres or branch offices in Hong Kong. Pursuant to the New York Convention, arbitral awards made in Hong Kong can be enforced in 150 jurisdictions around the world. In this regard, Hong Kong absolutely has the edge to provide professional legal and arbitration services for the infrastructure facilities along the Belt and Road.
I understand that for the time being, the public may not be able to relate themselves to the Belt and Road Initiative or see the immediate benefits. As analysed above, Hong Kong’s participation in the Belt and Road Initiative is definitely not just for complementing the Mainland, but at the same time looking for new growing impetus for the city to meet the long-term needs. The Belt and Road Initiative can serve as a platform for Hong Kong to fully utilise its advantages, and will lead to a win-win situation for both Hong Kong and the Mainland. On the other hand, we should also have confidence in our strengths. As long as we can continue to uphold our core values and professionalism, we need not be afraid of losing our edges and characteristics for playing a part in the Belt and Road Initiative. Let us have an open mind and continue to adopt a pragmatic approach to deliberate on the long-term development direction of Hong Kong.
24 January, 2016
Back