Using Hong Kong’s International Financial Center to Foster the High-quality Development of China’s Real Economy

According to reports, the President of the Hong Kong Monetary Authority, Yu Weiwen, stated on April 4 at the 2023 China Financial Society Academic Annual Meeting and China Financial Forum Annual Meeting that Hong Kong will continue to leverage the advantages of an international financial center to help the mainland financial market better serve the high-quality development of the real economy.

President of the Hong Kong Monetary Authority, Yu Weiwen, will promote research and application of digital RMB cross-border payments

Hong Kong’s position as an international financial center continues to be a key advantage for fostering the development of the mainland financial market, contributing to the growth of the real economy. At the 2023 China Financial Society Academic Annual Meeting and China Financial Forum Annual Meeting, the President of the Hong Kong Monetary Authority, Yu Weiwen, affirmed Hong Kong’s commitment to leveraging its advantages to help the mainland financial market better serve the high-quality development of the real economy. This article will explore how Hong Kong’s international financial center plays a leading role in the economic prosperity of China, and how it is set to drive growth in the future.

The Role of Hong Kong’s International Financial Center in China’s Real Economy

Hong Kong’s financial infrastructure is characterized by its strong regulatory framework, sophisticated financial markets, and talented financial professionals. Hong Kong’s credibility as a financial center is anchored by its adherence to international standards such as the Basel Accords, recognized as the global benchmark for financial regulation. Its well-developed financial markets range from the stock and bond markets, foreign exchange and commodities, and derivatives markets. Additionally, Hong Kong is home to many financial services providers, including banks, insurance companies, asset managers, and law firms.
Hong Kong is also the gateway for foreign capital to access China’s financial markets, boasting well-established channels for foreign investment. Hong Kong is also China’s largest offshore renminbi center, regulating the currency’s circulation and settlement for cross-border trade and investment transactions.

The Benefits of Hong Kong’s International Financial Center

The platform provided by Hong Kong’s financial infrastructure has generated several advantages for China’s real economy, including:

Boosting Economic Growth

Hong Kong’s financial infrastructure has facilitated the efficient allocation of financial resources, supporting the growth of the mainland’s real economy. The inflow of capital and the trading of securities has supported the development of local businesses – especially small and midsize enterprises – with greater access to finance. This increases the potential for innovation and growth, expanding employment opportunities and driving the economy forward.

Enhancing Financial Regulation

Hong Kong’s robust financial regulatory framework is underpinned by the Hong Kong Monetary Authority (HKMA), which oversees the city’s financial system as a whole. By promoting the adoption of best practices, the HKMA helps ensure a transparent and stable financial system, protecting the interests of consumers, investors, and the broader economy.

Promoting the Internationalization of the Renminbi (RMB)

The establishment of offshore RMB business in Hong Kong has helped promote the use of RMB in cross-border trade and investment. This trend has continued, reinforced by the support of the Chinese government, which sees the internationalization of the RMB as an important aspect of globalizing the Chinese economy.

Future Outlook for Hong Kong’s International Financial Center

Despite increasing competition from other global financial centers, Hong Kong’s unique position as China’s most prominent financial hub is set to continue. With the commitment of the HKMA to maintain and improve its regulatory framework, and China’s larger-scale promotion of the use of the RMB, Hong Kong remains a strong contender in the international financial system.
One key driver for Hong Kong’s future growth is the Greater Bay Area project, which involves linking Hong Kong, Macau, and nine cities in Guangdong Province to create a regional innovation and technology hub. The project aims to foster innovation and high-tech industries, drive collaboration between different sectors, and encourage greater market integration in the region. By leveraging its strong financial infrastructure and talent pool, Hong Kong is well-positioned to drive the project’s financial development.

Conclusion

As President of the Hong Kong Monetary Authority, Yu Weiwen, stated at the 2023 China Financial Society Academic Annual Meeting and China Financial Forum Annual Meeting, Hong Kong is committed to leveraging its advantages as an international financial center to promote high-quality development of the mainland financial market and real economy. Hong Kong’s established financial infrastructure, regulatory framework, and talent pool provide the tools needed for efficient allocation of financial resources, supporting the growth of the mainland’s real economy. However, to maintain its role as China’s leading financial center, Hong Kong must continue to embrace opportunities for growth and innovation.

FAQs

1. Is Hong Kong’s financial system still robust despite the ongoing protests?
Yes, Hong Kong’s financial system remains strong despite the protests taking place in the city since mid-2019. The Hong Kong Monetary Authority has continued to ensure stability in the financial system, and financial institutions are generally operating normally.
2. How important is Hong Kong to China’s economic development?
Hong Kong is a key contributor to China’s economic development, providing a platform for foreign capital to access China’s markets and supporting the growth of local businesses with greater access to finance.
3. What is the impact of the Greater Bay Area project on Hong Kong’s financial industry?
The Greater Bay Area project is set to drive collaboration between different sectors, encourage greater market integration in the region, and foster innovation and high-tech industries. By leveraging its strong financial infrastructure and talent pool, Hong Kong is well-positioned to stimulate the project’s financial development.