IMF – Donald Tsang Speech


Donald Tsang

1997 WBG/IMF Annual Meetings


Financial Secretary, Mr Donald Tsang, at the Breakfast Briefing for Private Sector Participants at 1997 WBG/IMF Annual Meetings

Saturday, September 20, 1997

"Hong Kong : At the Centre of International Finance and Business"

Good morning, ladies and gentlemen,

First of all, I would like to thank the Trade Development Council for organizing this briefing. It is my honor to speak to the most distinguished financiers coming from all over the world this morning.

Just a few months ago, the IMF classified Hong Kong as an "advanced economy". This was a vote of recognition of Hong Kong's economic performance. Now, the World Bank and IMF are holding their Annual Meetings in the Hong Kong Special Administrative Region (HKSAR) within 90 days of the resumption of Chinese sovereignty. This is a vote of confidence in the HKSAR, trusting that Hong Kong's prosperity will continue under the "one country, two systems" concept, or I should say the "one country, two systems" principle as the concept has been realised and is being practiced. This principle emphasizes the importance of maintaining Hong Kong's capitalist system. The legal instrument of implementing this principle is the Basic Law, our mini-constitution, which stipulates that Hong Kong will enjoy a high degree of autonomy in all our affairs other than foreign affairs and national defense.

Financial Autonomy

In financial and monetary terms, this means that within one country, there are two currencies, two monetary systems and two monetary authorities. Under the Basic Law, the SAR Government has full autonomy in formulating its own monetary and financial policies. We will continue to safeguard free flow of capital. The Hong Kong dollar remains the only legal tender in Hong Kong as before. In performing its central bank functions, the Hong Kong Monetary Authority is fully independent from its counterpart in the Mainland - the People's Bank of China. The US dollar link is still being maintained. The stronghold for maintaining the link is the combined assets of the Exchange Fund and the Land Fund totaling US$81 billion as at the end of July 1997. This link has contributed significantly to the monetary stability of Hong Kong for 14 years since its inception in 1983 and will continue to do so.

Market Performance after the Reunification

Before the reunification, there were skeptics who cast doubt on whether the guarantees enshrined in the Basic Law would be honored at all. Facts have dispelled such skepticism. Business is as usual here. The strong feeling of stability and enthusiasm is palpable everywhere you go in Hong Kong. This explains why investors have still strongly favored Hong Kong after 1 July 1997. Let us look at the stock market. Turnover at the Hong Kong Stock Exchange has increased substantially since the beginning of this year. The average daily turnover since 1 July has been US$2.5 billion per day, which is about 50% higher than the average for the first six months. We saw some adjustments in major international and Asian securities markets at the end of August and in early September. Being an international financial centre with an entirely open regime, Hong Kong was no exception. However, the market has functioned in an orderly way, thanks to the much improved trading and settlement systems and the pre-emptive measures taken by the Securities and Futures Commission, the Stock Exchange, the Futures Exchange and the Clearing Houses. Haphazard turbulence has not shaken our strong fundamentals at all. I am confident that the liquidity, the transparency and sound regulation will continue to be the underlying strengths of Hong Kong's market.

At the same time, we are also committed to further developing our market to meet different investors' needs. A couple of months ago, we began trading regional derivative warrants and convertible bonds on the Hong Kong Stock Exchange. Through linking up the Stock Exchange of Hong Kong with the Philadelphia Exchange and the Hong Kong Futures Exchange with the New York Mercantile Exchange, we have also enabled trading on their currency options and commodities futures contracts respectively in Hong Kong during Asian business hours. More recently, we have introduced two red-chip index futures to the market. I am sure you all know that red-chips refer to Hong Kong or overseas-incorporated companies with a significant shareholding by Mainland Chinese entities and usually with the majority of their assets in Mainland China. In less than a week's time, we will be putting the Hong Kong Interbank Offer Rate futures contracts for trading on the Automatic Trading System of the Hong Kong Futures Exchange. All of these are indications of our commitment to maintain and enhance Hong Kong's competitiveness and our readiness to answer the market needs.

Hong Kong as China's international financial centre

The introduction of red-chip securities products in the Hong Kong markets heralds an even closer economic relationship between the Mainland and Hong Kong. Hong Kong has become the most important capital-raising centre for Mainland Chinese enterprises. As at the end of August 1997, there were 34 Chinese state-owned enterprises listed in Hong Kong, having raised about US$7 billion through our market. More such listings are in the pipeline. Financial transactions between the Mainland and Hong Kong have grown substantially. At end-March 1997, external claims by Hong Kong's authorised institutions on Mainland banks and non-banking entities amounted to US$38 billion and US$9 billion respectively. Their corresponding external liabilities to banks and non-bank customers in the Mainland amounted to US$36 billion and US$2 billion.

The economic outlook for the Mainland remains favourable. Indeed, a recent World Bank report on global economic prospects has named Mainland China among the "Big Five" - the new engine house for world growth over the next quarter century. Most analysts put the forecast real GDP growth rate for 1997 at around 9-11%. Over the medium term, the economy is targeted to grow by an average of about 8% per annum in the period up to 2000. Against this favourable background, we expect Hong Kong's role as China's international financial centre will grow in parallel. For Hong Kong is not just privileged by the natural linkage with Mainland China, it also has the best concentration of infrastructure and human resources in the world to serve the Mainland's huge funding needs. We have already mapped out plans to maintain this position in the 21st century.

First, we will encourage the development of new financial products in the markets. In the debt market, the soon-to-be-introduced Mandatory Provident Fund scheme will create huge demand for quality debt instruments. The newly founded Mortgage Corporation intends to start its first purchase of mortgages to build up its portfolio in the last quarter of 1997, with a view to securitising mortgage soon after. On the stock market, I have earlier mentioned red-chip securities products. Even without a crystal ball, I can envisage that more red-chip-related derivatives will flourish. Moreover, we will continue to examine the feasibility of trading Depository Receipts on the Hong Kong Stock Exchange and the setting up of a Second Board for growing small and medium size enterprises. Our efforts in the exploration and development of new products to respond to market needs will continue.

Second, we will gear up efforts to upgrade the infrastructure in the financial services sector to meet future needs. On the banking front, we introduced a Real Time Gross Settlement System for our inter-bank payment system to reduce the settlement risk last year. Our plan is to link up Hong Kong's local payment system with that of the Mainland to provide a Payment versus Payment facility for exchange transactions between the Hong Kong dollar and Renminbi. For the stock market, the Exchange has expanded the capacity of the computer system so that it can deal with a daily turnover of US$6.5 billion and eventually US$13 billion. For the debt market, we plan to establish bilateral linkages with the domestic central depositories in the region to facilitate cross border trading and investment in debt securities. We are also looking at the linkage and integration of the various settlement and clearing systems. Equipped with such sophisticated infrastructure, Hong Kong is in the best position to function as China's international financial centre.

Third, we recognise the importance of human resources. With a service sector accounting for over 80% of the GDP, we have been adapting our education system to the service-based economy. The future focus will be on information technology. We aim to strengthen students' computer knowledge at all levels. That is why the Chief Executive and I were especially interested in visiting institutes in this field during his recent visit to Singapore and mine to Australia. Another area of emphasis is language skills. Our aims are to raise the students' language proficiency in both English and Chinese and enable them to command Putonghua which is the main language of our trade with the Mainland. In the years ahead we will strive to ensure an ample supply of skilled workers and professionals for the financial sector through training and research.


As a concluding remark, I wish to say that this grand event means a lot to the people of Hong Kong. The World Bank and IMF hold their annual meetings outside Washington only once in every three years. The event has not only brought the top officials of the World Bank and IMF and distinguished guests like yourselves to Hong Kong. It has also drawn the world's attention to how Hong Kong has been doing since 1 July 1997. You and other participants of the meetings and seminars will have the chance to bear witness to our way of life in Hong Kong uninterrupted across July 1. Perhaps, the single difference that you can sense is the removal of the air of uncertainty and impossible vitality of the city. With the rapid economic development and reform in the Mainland, Hong Kong strides ahead at the same pace and serves as China's foremost international financial centre in the next millennium.

Thank you. 





  首先多謝貿易發展局籌辦這個簡報會。今天早上,我能夠 向全球最傑出的金融財經專家致辭,實在感到非常榮幸。

  剛於數月前,國際貨幣基金組織把香港劃為「先進經濟體 系」,這證明香港的經濟表現已獲得確認。香港回歸中國至今 還不到九十日,世界銀行與國際貨幣基金組織即在香港特別行 政區(香港特區)舉行年會,可見世界各地均對香港特區有信 心,深信在「一國兩制」的構想下,香港會繼續繁榮,或者我 應該說,在「一國兩制」的原則下,因為這個構想已經實現, 並正在實行。這個原則強調維持香港的資本主義制度的重要 性。落實這個原則的法律文據是我們的小憲法,即《基本法》, 因為《基本法》訂明,除外交和國防事務外,香港特區實行高 度自治。


  在金融和貨幣方面,這種自主權表示,在一個國家內有兩 種貨幣、兩種金融體系和兩個金融監管機構。根據《基本法》, 特區政府在制定貨幣金融政策方面,有完全的自主權。我們會 繼續保障資金的流動自由。一如以往,港元仍然是香港唯一的 法定貨幣。在執行中央銀行的職能時,香港金融管理局與內地 的中央銀行,即中國人民銀行完全相對獨立。港元與美元掛u 的聯繫匯率制度,維持不變。截至一九九七年七月底,外幫 金與土地基金的資產合共八百一十億美元,這是維持聯繫徽v 制度的堅固基礎。這個制度在一九八三年實施,十四年來對本 港貨幣的穩定貢獻良多,日後也會繼續如此。


  在回歸前,一些懷疑論者對《基本法》所作出的保證到底 能否落實表示疑慮。事實已將這種疑慮驅除。本港各行各業都 如常運作,到處都感覺到香港是穩定而充滿活力的。這說明了 為何在一九九七年七月一日之後,香港仍然深受投資者歡迎。 讓我們看看股票市場的情況。自今年年初以來,香港聯合交易 所的成交量已大幅增加。七月一日以後,平均每日的成交量達 二十五億美元,較今年頭六個月的平均每日成交量高出約百分 之五十。主要的國際及亞洲證券市場在八月底和九月初都曾出 現一些調整。作為一個全面開放的國際金融中心,香港也不例 外。不過,本港的市場仍能有秩序地運作,這是有賴已大為改 善的交易及交收系統,以及證券及期貨事務監察委員會、聯合 交易所、期貨交易所和結算公司所採取的預防措施。偶然出現 的波動,並未動搖我們的鞏固基礎。我深信,流動性強、透明 度高和健全的監管,仍會是香港市場的堅實基礎。

  同時,我們亦致力進一步發展我們的市場,以切合不同投 資者的需要。數個月前,香港證券交易所開始買賣地區性膝 認股權證及可轉換債券。由於香港聯合交易所和香港期貨交易 所已分別與費城證券交易所和紐約商品交易所建立聯繫,我們 亦能在亞洲的交易時間在香港分別買賣這個交易所的貨幣期 權及商品期貨合約。最近,我們在市場推出了兩種紅籌指數期 貨。我相信各位都知道,紅籌是指大部分股份由中國內地機構 持有的香港或海外註冊成立的公司,而這些公司的主要資產通 常也在內地。在不足一個星期內,我們會推出香港銀行同業拆 出息率期貨合約,在香港期貨交易所的自動化交易系統買賣。 所有這些工作都顯示我們決心維持並提高香港的競爭力,以及 我們已隨時準備迎合市場的需要。


  本港市場引進紅籌證券產品,顯示內地與香港之間的經濟 關係更為密切。香港已成為內地中國企業最重要的融資中心。 截至一九九七年八月底,有三十四家中國國營企業在香港上 市,透過本港市場共籌集得約七十億美元。另有一些國營企業 亦正安排在港上市。內地與香港之間的金融交易有大幅增長。 一九九七年三月底,本港認可機構對內地銀行和非銀行機構的 對外債權,分別為三百八十億美元和九十億美元。至於本港認 可機構對內地銀行和非銀行客戶的對外負債,則分別為三百六 十億美元和二十億美元。

  中國內地的經濟前景依然美好。事實上,世界銀行在最近 發表的全球經濟展望報告中,把中國內地列為「五大」之一, 這即表示,中國是下個四分一世紀推動全球經濟增長的一股新 動力。大部分分析家都預測,中國一九九七年的國內生產總值 的實質增長約為百分之九至十一。在中期而言,中國的目標, 是在直至二零零零年為止的期間,每年平均取得約百分之八的 經濟增長。基於這個有利的環境,我們預料,香港作為中國的 國際金融中心的地位,會相應加強。香港不僅得天獨厚,地理 上與中國內地相連,而世界一流的基礎設施和人力資源也集中 在這堙A可以滿足內地龐大的融資需求。因此,我們已制定種 種計劃,務使香港在二十一世紀能夠維持這個地位。

  首先,我們會鼓勵市場發展新的金融產品。在債務市場方 面,強制性公積金計劃即將推行,對優質債務票據會有龐大需 求。新成立的按揭證券公司打算在一九九七年最後一季進行首 批按揭收購,建立本身的投資組合,以期在不久將按揭證券 化。在股票市場方面,我先前已提及紅籌證券產品。即使沒有 水晶球,我也能預見會有更多與紅籌股有關的衍生金融工具活 躍發展。此外,我們會繼續研究可否在香港聯合交易所買賣存 託憑證,以及為發展中的中小型企業設立第二板市場。我們會 繼續致力研究和發展新產品,以迎合市場的需要。

  其次,我們會進一步改善金融服務業的基礎設施,以切合 日後的需要。在銀行業方面,我們去年為銀行同業支付系統設 立了即時支付結算系統,以減低結算風險。我們計劃把香港本 地的支付系統與內地的支付系統聯繫起來,為港元與人民幣的 外匯買賣提供即時匯款同時交收設施。至於股票市場,聯合交 易所已擴大了電腦系統的處理量,使該系統能夠處理每日六十 五億美元而最終可達一百三十億美元的成交量。債務市場方 面,我們準備與區內各市場當地的中央保管人建立雙邊聯繫, 以方便跨境買賣和債務證券的投資。同時,我們正研究如何聯 系及結合各個交收及結算系統。有了這些精密先進的基礎設 施,香港已具備最有利的條件,擔當中國的國際金融中心的角 色。

  第三,我們明白,人力資源非常重要。由於服務業佔本地 生產總值超過八成,我們已在設法使本港的教育制度能配合以 服務業為基礎的經濟體系。本港將來的發展重點是資訊科技。 我們計劃全面提高所有學生的電腦知識水平。行政長官最近前 往新加坡訪問,以及我到澳洲訪問,都對參觀資訊科技機構特 別感興趣,就是為了這個原因。另一點須強調的是語文能力。 我們的目標是提高學生的中英文水平,並使他們能夠說普通 話,因為普通話是我們與內地進行貿易時所用的主要語言,在 未來數年,我們會盡力透過培訓和研究,確保能為金融界提供 足夠技術人員及專業人才。


  最後,我想告訴各位,這項盛事對本港意義深遠。世界銀 行及國際貨幣基金組織每隔三年才在華盛頓以外的地方舉行 年會。這項盛事不僅令世界銀行及國際貨幣基金組織的首腦以 及各位貴賓雲集本港,也讓全世界注意到香港在一九九七年七 月一日以後的實況。各位及參加會議和研討會的人士,會有機 會親自看到香港的生活方式在七月一日之後並無絲毫改變。或 者,各位感到的唯一改變就是疑慮的氣氛已消除,而香港的活 力實在令人難以置信。隨茪漲a的經濟迅速發展和改革,香港 會同步向前邁進,並在下一世紀擔當中國的首要國際金融中心 這個角色。