Making connections count

Carrie Lam, chief executive of Hong Kong, says the territory must not turn its back on an open economy

China

In 2017 we marked the 20th anniversary of Hong Kong’s return to the motherland, a milestone on which to build on our achievements and begin a new chapter of progress. In October I gave my maiden policy address as chief executive of the Hong Kong Special Administrative Region. It reflected my beliefs and policies, and charted the gradual delivery of my election pledge to build a better Hong Kong.

Hong Kong’s greatest advantage has always been our close proximity to, and strong relationship with, mainland China. This is coupled with a unique competitive edge provided by “one country, two systems”. As “one country” we benefit from the rapid economic and social advances of the world’s second-largest economy, and we enjoy the full support of the central government in Beijing. Under “two systems” Hong Kong continues to thrive with its own institutions and its global connectivity. It is ranked as the world’s freest economy by the Heritage Foundation, an American think-tank, and as the world’s most competitive economy by IMD, a Swiss business school. We are consistently listed among the leaders for the rule of law and judicial independence.

These international rankings show that Hong Kong is open for business. We welcome enterprises from all over the world. More than 8,200 operations in Hong Kong have parent companies in the mainland or overseas. Half of them use Hong Kong as their regional headquarters or as regional offices.

Our status as a regional hub is supported by our links to the mainland and beyond. Hong Kong’s airport handles more cargo than any other in the world and has the third-highest number of international passengers. Expansion through a third runway is under way. The 26km (16-mile) Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link, due to open in 2018, will take passengers to Guangzhou in 48 minutes. The 42km-long Hong Kong-Zhuhai-Macau Bridge, meanwhile, is close to being commissioned and will cut travelling time between the airport and Zhuhai from four hours to only 45 minutes. For the convenience of over 600 000 daily commuters between Hong Kong and Shenzhen, a control point, the seventh land crossing, will be completed in 2018.

These big cross-boundary infrastructure projects will enhance Hong Kong’s connections with mainland China, providing us with access to its people, capital, land and market. Opportunities abound in the Guangdong-Hong Kong-Macau Bay Area—a city cluster of 66m people which is already the most affluent area of China, and which hopes to establish an international innovation and technology centre. 

The future is bright. But in order to do better the Hong Kong government must become more than a regulator and provider of services; it must effectively promote Hong Kong. This certainly does not mean turning our back on long-standing cherished business advantages, such as the rule of law, an open economy, free trade, minimal red tape and low taxes. In fact, I have already proposed cutting profits tax by half, to just 8.25% on the first HK$2m ($256,000) in profits. Thereafter the current flat rate of 16.5% profits tax—low compared with many other economies—will apply. We will promote spending on research and development through appropriate tax measures. 

We will also redouble our government-to-government efforts to open new markets for our businesses, investors and service providers. A free-trade agreement with the Association of South-East Asian Nations has just been concluded and we are negotiating one with Australia. We have just entered into a strategic dialogue on trade partnership with Britain. We plan to open new economic and trade offices in Russia, India, the United Arab Emirates, South Korea and Thailand. 

We are now finalising an agreement with the government in Beijing regarding Hong Kong’s involvement in the far-reaching “Belt and Road” initiative. This will be a new engine for our economic growth. Hong Kong will be a key link in the initiative, capable of contributing to infrastructure investment as well as financing, and providing the professional and legal services needed to connect the many belt-and-road countries.

The best is yet to come

But we cannot take pride in our economic progress if our people do not share the benefits. In 2018 and beyond, the Hong Kong government has committed itself to big social programmes. In education we will offer free kindergarten and make university education more affordable. In health care we will link funding for public hospitals to the ageing of the population and shift towards primary care. In social welfare we are providing more support for working families. And we will spare no effort in increasing land supply and making homes more affordable. The strong fiscal reserves we have built up over the years will enable us to invest for the future and relieve our people’s present burdens. The best of Hong Kong is yet to come. 

VIDEO>> What will be the top ten stand-out moments in 2018?
The World in 2018 brings you tomorrow's water-cooler moments, today

Credit: Lauren Crow
You are reading a small selection of content from The World in 2018.
To read all the articles in this year’s edition download The Economist app.
Download 'The World In 2018 iOS app'
Download 'The World In 2018 Android app'