Promote Development in Hong Kong and Macao as Part of China's Overall Development

Promote Development in Hong Kong and Macao as Part of China's Overall Development*

November 12, 2018

The Third Plenary Session of the 11th CPC Central Committee convened in December 1978 marked the start of the reform and opening up initiated by Deng Xiaoping. China has since embarked on a great journey. From the outset, the vitality of Hong Kong and Macao has played a key role. Over the past 40 years, compatriots in the two special administrative regions (SARs) have never failed to play a creative role and have been fully engaged in the process.

I know this firsthand. During my tenures in the provinces of Fujian and Zhejiang and in the city of Shanghai, I personally planned for and facilitated a good number of cooperation projects with Hong Kong and Macao. After I started working at the CPC Central Committee in 2007, I was in charge of Hong Kong and Macao affairs, and thereby gained a thorough understanding of them. During this time, I made many friends from the two SARs.

As I see it, our compatriots in Hong Kong and Macao have mainly played the following roles in reform and opening up:

First, a leading role in investment and starting businesses on the mainland. After reform and opening up began, our Hong Kong and Macao compatriots were the first to act, quickly heading to the mainland to make investments and develop businesses. You created a number of "firsts", including the first joint venture company, the first jointly-funded expressway, the first branch of a non-mainland bank, and the first joint venture five-star hotel. I once visited the Zhongshan Hot Spring Resort, which was co-invested by Mr Fok Ying Tung and Mr Ho Hung Sun in the city of Zhongshan, Guangdong Province in 1979, shortly after it opened. I was impressed by its facilities and services. Hotels on the mainland at the time were no comparison to it. Hong Kong and Macao compatriots not only fueled the mainland's economic development with their investments, but also caused a chain reaction – attracting a flood of international capital to the mainland. For many years, Hong Kong and Macao have remained the largest source of inbound investment on the mainland, which by the end of last year had added up to US$1.02 trillion, accounting for 54 percent of all inbound investments on the mainland.

Second, a demonstration role in market economy. In the early years of reform and opening up, when many people on the mainland were burdened by the influence of the planned economy and clung to old thinking, people of vision from Hong Kong and Macao were the first to share with people on the mainland their experience of international standards and international markets. Many of them took on the role of mentors, offering counseling opinions on the reform of enterprises and the land system. As early as 1978 Mr Leung Chun-ying gave free lectures on Western systems of land economy and management in Shenzhen, Shanghai and some other cities. In 1987 he co-authored a bidding document for land auctions in Chinese and English, which was the first such document in Shenzhen and in China too. Mr Anthony Neoh and Mrs Cha Shih May-lung helped the mainland establish a regulatory system for stock markets, with a symbolic annual salary of RMB1. Hong Kong and Macao compatriots have made important contribution to the development of a market economy on the mainland.

Third, a catalytic role in institutional reform. Hong Kong and Macao were among primary factors in the mainland's decision to establish special economic zones. In 1979 the CPC Guangdong Provincial Committee proposed to the Central Committee that Guangdong, tapping into the advantage of its proximity to Hong Kong and Macao, could take the lead in opening up and could set up trade zones in Shenzhen, Zhuhai, and Shantou – hometown of many overseas Chinese. Hong Kong and Macao compatriots were engaged in the whole process of creating these zones, from general planning to drafting relevant laws and regulations, and to the incubation and operation of individual programs.

Fourth, a bridging role in the country's two-way opening up. In the early stage of reform and opening up, Hong Kong and Macao, with access to quotas for exports to Europe and the US and some other advantages, helped the mainland obtain a large number of export orders. By the mid-1990s, more than 80 percent of manufacturers in Hong Kong had moved to the Pearl River Delta and other parts of the mainland. All this stimulated a rapid growth of the export-oriented manufacturing industry, and helped the mainland integrate into the global industrial chain. Meanwhile, Hong Kong and Macao also served as a conduit and platform for overseas financing and investment by mainland businesses. Through Hong Kong many of these businesses got to know and acclimatized to the international market, learning how to survive and thrive. Today nearly half of the companies listed on the Hong Kong Stock Exchange are from the mainland, making up close to 70 percent of the total exchange value.

Fifth, the role of a testing ground. China piloted many of its opening-up policies in Hong Kong and Macao first, gained experience and then introduced them into other parts of the country step by step. This approach allowed the country to advance opening up while effectively controlling risks. It also gave Hong Kong and Macao a head start. Take the opening up of the service market on the mainland as an example. Guangdong Province and the two SARs were the first to start free trade in services between them within the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), through which we gained experience for the nationwide introduction of a management system of pre-establishment national treatment plus a negative list for foreign investment. The role of Hong Kong and Macao as a testing ground is more prominent in the opening up of the mainland's financial sector. The Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect, and Bond Connect are all key steps taken by the mainland in recent years to open up its capital market. RMB internationalization also started in Hong Kong. The region is now the world's largest offshore Renminbi business hub with the greatest variety of offshore Renminbi products.

Sixth, an exemplary role in urban management. Hong Kong and Macao have a wealth of experience in urban development, management and public services, from which the mainland can learn. For instance, the Shanghai Hongqiao International Airport improved its operation soon after adopting the management philosophy of Hong Kong International Airport. In 2011 it took first place among the most improved airports in the Skytrax World Airport Awards. Beijing, Guangzhou, Shenzhen and other cities on the mainland have also learned from Hong Kong in the construction and operation of subways. The first flying service team was organized on the mainland with the assistance of the Government Flying Service of Hong Kong. By drawing upon the successful practice and experience of Hong Kong and Macao, the mainland has effectively improved its urban development and management.

An ancient Chinese said, "People drawn to each other by kindness and virtues make good friends; people who hold together with a meeting of minds make bosom friends." It must be noted that Hong Kong and Macao compatriots have come to the mainland to invest and start businesses, not only because they have discerned business opportunities here, but also because they hope to see the mainland shake off poverty and China become stronger and more prosperous. You have donated to programs for the public good on the mainland, including those in education, technology, culture, health care and sports, not just for doing good and sowing virtue, but also out of your fraternal bonds with fellow countrymen on the mainland. Sir Run Run Shaw donated more than HK$10 billion to programs for the public good on the mainland; Mr Tin Ka Ping even sold his house to fund education programs on the mainland. He lived in a rented apartment in his later years. In the 2010 Yushu earthquake in Qinghai Province, Hong Kong volunteer Wong Fuk Wing braved aftershocks to save others before he died in the earthquake. Every time the mainland is hit by massive natural disasters, our compatriots in Hong Kong and Macao would show great empathy for the victims, and have always been the first to offer help. Time and again you have offered help and assistance in times of adversity to fellow countrymen on the mainland, proving that blood is thicker than water.

In short, our compatriots in Hong Kong and Macao have both witnessed and participated in, both benefited from and contributed to China's reform and opening up over the past 40 years. Along with people of the mainland you have created a miracle. China's reform and opening up is a cause in which Hong Kong, Macao and the mainland complement each other with their respective strengths and develop together; it is a cause in which people in Hong Kong, Macao and the mainland work side by side with one heart and one mind; it is also a cause for Hong Kong and Macao to integrate into the overall development of the country, and share the glory of a strong and prosperous motherland.

"People on a long and arduous journey will not stop and opt for an easy one before reaching the destination." Since the 18th CPC National Congress in 2012, we have championed reform and opening up and made unprecedented efforts to drive reforms on all fronts. We have made top-level designs and rolled out more than 1,600 reform programs in economic, political, cultural, social, eco-civilization and other fields. Many of the reforms are unprecedented and having a nationwide impact. They include the reform of the market system, the macroeconomic regulation system, the fiscal and tax systems, the financial system, state-owned enterprises, the judicial system, the education system, the ecological conservation system, Party and state institutions, the supervision system, and of national defense and the armed forces.

I have been talking about reform and opening up on every major occasion, emphasizing that we must have the courage to tackle tough issues, navigate treacherous waters, and engage in painful self-adjustment to carry reform through. At the opening ceremony of both the Boao Forum for Asia Annual Conference and the First China International Import Expo earlier this year, I reiterated China's resolve to press on with reform. My recent inspection tour in Guangdong Province was designed to send a strong message of continued reform and opening up in the new era; reform and opening up is an ongoing process with no endpoint. I also emphasized that, by continuing reform and opening up, China is to create new and greater miracles that will impress the world. The more complex the situation, the more steadfast we will be in reform and opening up. We will never regress to closed-door development. To realize national rejuvenation, China must advance with the times, and keep pressing forward. As our ancestors said, "If you can improve yourself in a day, do so each day, forever building on improvement."

Socialism with Chinese characteristics has entered a new era, as have China's reform and opening up and the practice of "one country, two systems". One of the hallmarks of this new era is our engagement in reform and opening up, in which Hong Kong and Macao still have a special position, unique strengths, and an irreplaceable role to play. I hope Hong Kong and Macao compatriots will continue to participate in reform and opening up in the pioneering spirit and the spirit of patriotism. I hope you will follow the trend of the times, make the best use of the conditions, and achieve better development of your home regions through integration with the overall development of the country. Together we will write a new chapter on the great rejuvenation of the Chinese nation.

For Hong Kong and Macao, the policy of "one country, two systems" gives you the biggest strength; China's reform and opening up set the broadest stage for your development; and national strategies such as the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area, present you new and important opportunities. We must fully understand and properly define the two SARs' position in China's reform and opening up in the new era. We will support you in seizing opportunities, cultivating new strengths, taking on new roles, seeking new development, and making new contributions. In this regard I would like to express my hopes for the two regions as follows:

First, I hope Hong Kong and Macao will support the country's all-round opening up more proactively. As the country opens up wider, Hong Kong and Macao will see their position and role grow stronger rather than diminish. I hope the two regions will continue to take the lead in attracting capital, technology, and talent for a quality development of the national economy and the new round of high-level opening up. In particular, Hong Kong and Macao should leverage their extensive international connections and sophisticated professional services on the one hand, and rely on the mainland's huge market, complete industrial system, and technological competitiveness on the other. In this way, Hong Kong may reinforce its status as the world financial, shipping, and trade hub and accelerate its ascension to an international science and technology innovation center, while Macao may intensify its efforts to develop itself into a world-class tourism and leisure center and to build a business and trade service platform between China and Portuguese-speaking countries. Thereby the two SARs will become the beachheads in China's two-way opening up.

Second, I hope Hong Kong and Macao will integrate their development into the overall development of the country more proactively. This integration is what the principle of "one country, two systems" and the program of reform and opening up in our times require. And it is also called for by the objective need of Hong Kong and Macao to explore new paths, create new space, and foster new drivers for their own development. Building the Guangdong-Hong Kong-Macao Greater Bay Area is a grand plan we have formulated on the basis of the overall and long-term interests of our country, and a major policy to maintain long-lasting prosperity and stability in Hong Kong and Macao. Innovation is critical for the success of this endeavor. Within the framework of the "one country, two systems" principle and the SARs' Basic Laws, we should give full play to the combined strengths of Guangdong, Hong Kong and Macao, introduce new systemic and institutional mechanisms, and boost the circulation of production factors. The Greater Bay Area spans three customs territories in one country that operate under two different social systems with three different currencies. This is unprecedented in the world. We must make bold experiments and blaze a new path. Meanwhile, Hong Kong and Macao should further improve their competitiveness and focus on cultivating new growth drivers.

Third, I hope Hong Kong and Macao will participate in national governance more proactively. Since their return to the motherland, the two SARs have become part of the national governance system. Our compatriots in Hong Kong and Macao should improve local systems and mechanisms for enforcing the Constitution and the Basic Laws in line with the "one country, two systems" principle, and enhance their capacity for and improve their performance of governance. Meanwhile, you should pay close attention to the country's overall development, safeguard the country's political system, actively engage in furthering the country's economic, political, cultural, social, and eco-environmental progress, and conscientiously safeguard national security. Having many advantages on the world stage, the people of Hong Kong and Macao may support our country's participation in global governance in various ways.

Fourth, I hope Hong Kong and Macao will promote international people-to-people exchanges more proactively. With cultural diversity, the two SARs may serve as key links in cultural exchanges between China and the rest of the world. Being international metropolises, Hong Kong and Macao may tap into their extensive connections with the outside world, spread the best of traditional Chinese culture, present China's principles and policies, and tell China's stories, including stories about the successful implementation of the "one country, two systems" principle. In doing so, Hong Kong and Macao will continue to play a special role in promoting cultural exchanges between the East and the West, facilitating mutual learning among civilizations, and building people-to-people bonds.

There are many young entrepreneurs from Hong Kong and Macao in this room. I am glad to see you. A nation will prosper only when its young people are energetic. The young people of Hong Kong and Macao are the hope and future of the two regions; they are the new lifeblood for national development. Only when the young people of Hong Kong and Macao get strong, can the two regions and the entire country be strong. We will create more opportunities for the young people in the two SARs and help them overcome difficulties in education, employment, and in starting their own business, thereby fostering a favorable social environment for them to realize their dreams.

Today we are closer than ever before to our goal of national rejuvenation. There is much that Hong Kong and Macao compatriots can contribute in realizing this goal, and by doing so you will add new glory to your home regions. As our ancestors said, "On reaching the last leg of a journey, one is only half way there." All Chinese should work in unity, and persevere, dauntlessly and steadfastly, in reaching our target. I hope that people in Hong Kong and Macao will work together with those on the mainland to open up new prospects for "one country, two systems", to create a better life for yourselves, and to realize the Chinese Dream.

* Part of the speech at the meeting with delegations of Hong Kong and Macao in celebration of the 40th anniversary of reform and opening up.

(Not to be republished for any commercial or other purposes.)