think GLOBAL think HONG KONG Advantages of Pearl River Delta Plus: Leveraging Hong Kong Service Platform to Support Cross-border Business Operation Hong Kong’s Role in International Co-operations Dr. Jonathan Choi Chairman, Hong Kong – Japan Business Co-operation Committee 15 May 2012

HK-PRD: Geographic Superiority

HK-PRD: Inseparable Relations Pearl River Delta (PRD) – The first economically liberalized region since China’s Reform and Opening Up in 1979 Investment of HK based companies – Foreign direct investment – Skilled workforce HK-PRD  China's economic growth hub

Guangdong-Mainland’s economic growth hub Guangdong has strong manufacturing industry and export capabilities Guangdong is in the critical stage of upgrading and transformation

Gradual shift of global economic focus to the East PRD enterprises grow rapidly and develop high value-added industries HK’s prominent superiority: Infrastructure, Finance, Professional services, etc. Continuous policies in strengthening HK-PRD co-operation − The National 12 th Five-Year Plan  More specific and focused separate chapter for HK for the first time  Specifies development of new district zones (Qianhai, Nansha and Hengqin)  closer ties among Guangdong, HK and Macau − Vice Premier Li Keqiang’s 36 new policy measures  HK and Mainland co-operations − Supplement VIII to CEPA:  Further enhance economic, trade and financial co-operations between Mainland and HK  Helps accelerate HK’s professional services in entering Mainland market  Acts as key platform in further promoting the HK-Guangdong economic integration − Outline of Plan for Reform and Development of the PRD Framework Agreement on Guangdong-Hong Kong Co-operation Regional Co-operation Plan on Building a Quality Living Area HK-PRD's Role between China and Overseas: Increasingly important

HK-PRD Region: Integration of Infrastructure Network Promote co-operation of aviation industry – Improve coordination mechanism – Perform airspace management mechanism Strengthen HK-PRD transport networks – Increase frequency of HK-PRD shipping routes – Provide efficient and private services: yachts and aircrafts – Provide speedy commercial aircraft and helicopter services Strengthen the role of HK as a hub of transportation – HK-Zhuhai-Macau Bridge (3-hour radius) – Guangzhou-Shenzhen-HK Express Rail Link (“1-hour living circle”) Enhance electronic clearance technologies

HK as the Logistic Gateway World-class cross-boundary infrastructure Highly efficient customs services and competitive advantages in – Handling high value goods – Providing high value-added services Satisfy needs of foreign sales and domestic distribution of PRD-based factories Integrate HK’s professional business services with Guangdong’s strong export capabilities Seize the development opportunities arising from the rapid growth of Mainland and Asian economy

HK’s roles as Offshore RMB Centre and Asset Management Centre CEPA VIII Support Mainland banks to make use of HK's international financial platform to develop international businesses Support HK insurance companies to enter the market through setting up business institutions or capital participation HK’s Advantages World’s largest offshore RMB centre – continue to expand and reach new milestones, increase liquidity and maturity Free capital flow Market-determined RMB exchange rates Important entrepôt of Mainland China Further advantages - Extend settlement periods  cover trading hours in Europe and the U.S.

HK as a Financial Centre - Further Strengthened Role and Functions Expansion of the RMB trade settlement scheme to entire country Support HK enterprises’ use of RMB for direct investment in the Mainland Introduction of a RMB QFII scheme for investing in the Mainland’s securities markets Expansion of number of enterprises issuing RMB bonds in HK and scale of their bond issuance Source: CEIC Hong Kong’s RMB Deposits, Remittances and Clearing Transactions Third Quarter of 2011 – HK handles 90.1% of the world’s RMB trade settlement

Enhance Regional Integration HK as platform for East Asian Economic Co-operations Economic relations with its neighboring economies, including Japan, have deepened with time Perfect platform for Japanese companies esp. SMEs entering the southern China market − Mainland enterprises  HK-PRD connections  Japanese market − HK-PRD: Japan’s economic interaction with China and the neighboring regions A more important role in promoting East Asian regional economic co-operation A platform in the future financial development in East Asia

Enhance Regional Integration HK as platform for East Asian Economic Co-operations HK Government has conveyed the wish to join the ASEAN-China Free Trade Agreement (ACFTA) Central government also supports HK to join ACFTA Make good use of HK’s connections with Asian countries HK can strengthen economic ties between China and ASEAN HK plays a strategic role to the region as – International financial centre – International business centre – Trading hub CGCC will organize a forum on East Asian Regional Co-operation in July 2012 – (ASEAN + CHINA) – (ASEAN + CHINA, JAPAN, S. KOREA)

THANK YOU!