Hong Kong is set to draw on its strength in financial services and the full range of professional services to tap into the world’s largest trading bloc Regional Comprehensive Economic Partnership (RCEP).
Chief Executive John Lee Ka-chiu said the majority of the members of the RCEP have responded warmly to Hong Kong’s application to join the trade bloc.
Currently, Hong Kong has been a significant trading partner to RCEP members. The economic output and trade volume of the RCEP represent 30% of the world. Hong Kong and the RCEP members also have close trade ties, with bilateral trade volume in goods reaching almost US$800 billion, representing 70% of trade in goods in Hong Kong in 2023.
Having entered into force in January 2022, RCEP has encompassed all 10 Association of Southeast Asian Nations (ASEAN) member states, along with Mainland China, Japan, South Korea, Australia and New Zealand.
ASEAN has long been Hong Kong’s second-largest trading partner. The trade and investments between the two sides have recorded significant growth with the bilateral trade in goods between Hong Kong and ASEAN amounting to US$144.6 billion last year.
At the opening ceremony of the Chinese General Chamber of Commerce World Chinese Entrepreneurs Summit on “Exploring the Opportunities of the RCEP Markets and Hong Kong’s Strengths”, Mr. Lee said SAR officials have been advocating for the city to join the RCEP in the past two years.
He said with backing from the Central Government and the efforts of all the parties involved, the majority of the RCEP members, including all ASEAN members, have responded positively to Hong Kong’s accession.
Also, Dr Kao Kim Hourn, Secretary-General of ASEAN, said at the summit that Mainland China is one the largest trading partners with ASEAN members, along with the US and EU.
“RCEP is a great change in global economy for businesses to grow and expand,’’ said Dr Kao, who led a delegation to visit Hong Kong, adding that there are numerous benefits in the RCEP as the trade flows and connectivity between Mainland China, Hong Kong and ASEAN member countries will further increase.
Dr Kao also highlighted that tariff reduction has meant that low-cost supply chain and reduced costs of procedures and transaction costs for businesses and enterprises. As markets have fully opened in the RCEP countries, professional services including accountancy, engineering and others can be easily accessible in markets.
He said there will be a dynamic transfer of skills and talents to achieve a win-win situation and attain economic growth, and professionals can achieve their full potential.
Meanwhile, Hong Kong has rich experience in supply chain management, said Jonathan Choi Koon-shum, Chairman of the Chinese General Chamber of Commerce. Mr. Choi stressed that once Hong Kong can access to the RCEP, local businesses can have a detailed division of labour in industry chains with Chinese businessmen in the RCEP and strengthen economic and trade ties in the whole region.
In the first panel session titled “Make Use of Hong Kong’s Financial Services to Explore Market Opportunities of the RCEP” in the summit, panelists have shared their views on the role of Hong Kong as an international financial hub to contribute to the RCEP on financing.
In the panel session, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said Hong Kong will also contribute to financing for businesses to make investment in green industries in the RCEP.
Mr. Hui said that the use of renminbi (RMB) will become more prevalent in the RCEP and therefore Hong Kong will benefit from the status as an offshore RMB hub on Mainland China’s currency settlement.
Hong Kong can work with RCEP members in fintech area, said Chan Ka-keung, Chairman of WeLab Bank and former Secretary for Financial Services and the Treasury. Chan, who served as a moderator in the panel, said the RCEP is the fastest-growing region in the world.
“There has been an unprecedented rise of wealth creation and capital flow,” said Mr. Chan. In fintech, all countries in Asia have embraced digital transformation, including banking and digital payment while people in Asia have quite adapted to use it. Central banks in Asia, including Hong Kong, have developed products to allow customers to make digital payment and cut down transaction costs.
Hong Kong Exchanges and Clearing (HKEX)’s Deputy CEO Wilfred Yiu Ka-yan said Hong Kong has a well-designed model ecosystem and local listed market covers stocks, bonds, derivatives and other products, thereby offering enterprises with vehicles to raise funds to meet their financial needs, coupled with a greater degree of capitalization.
In the second panel discussion on “Market Development of the RCEP and Opportunities for Hong Kong Professional Services”, Secretary for Commerce and Economic Development, Algernon Yau Ying-wah said Hong Kong has unique advantages under the principle of “One Country, Two Systems” and serves as a gateway linking the Mainland and the rest of the world, adding that Hong Kong can offer professional services for the RCEP members.
Hong Kong’s independent judiciary and common law system have given Hong Kong’s unique advantages to join the RCEP, said Teresa Cheng Yeuk-wah, Founder and Co-chairman of Asian Academy of International Law and former Secretary for Justice.
Also, Chan Chak-ming, Past President of the Hong Kong Law Society, said Hong Kong has an exemplary and simple taxation regime without inheritance tax and capital gain tax, thereby consolidating our city’s status as a prime magnet for setting up businesses and making investment.
In the third panel session, panelists have shared their insights on how the RCEP can drive the momentum of Hong Kong’s innovation and technology.
They highlighted that Hong Kong’s accession to the RCEP can help enhance more regional exchanges and development in innovative and technological industries.
Hong Kong will benefit significantly from RCEP membership with boosted trade in goods and services among member economies. Once Hong Kong’s accession is approved, it can help further simplify trade rules, boost talent and capital flows and foster more partnerships and investment in the region.
Image at the top is from the Chinese General Chamber of Commerce (CGCC).