Hong Kong’s Inclusion in China 5-Year Plan Shows Importance
Hong Kong’s inclusion in China’s 12th five-year plan indicates the city’s role as a financial center is not threatened by Shanghai, Chief Executive Donald Tsang said.
The plan “clearly mentions that the central government will strengthen Hong Kong’s position as financial center,” Tsang said in Beijing today. “Shanghai is China’s leading financial center and it is not in direct competition with Hong Kong. Rather, this is a mutually beneficial relationship.”
Hong Kong is vowing to grow as an offshore center for yuan trading, as Chinese Premier Wen Jiabao allows the currency to become more readily available beyond China’s borders to reduce reliance on U.S. dollars in trade and finance. Shanghai, whose economy exceeded the size of Hong Kong’s, has pledged to become a world financial center by 2020 in China’s plan.
China’s plan includes “international use of renminbi and Hong Kong will play an integral role” in it, economists led by Kevin Lai at Daiwa Capital Markets wrote in a March 2 report, referring to the yuan. “We expect the renminbi business to expand significantly in Hong Kong over the next three years” and benefit the city’s economy, they said.
Sales in the city of yuan-denominated debt, known as dim sum bonds, totaled 13.3 billion yuan ($2 billion) in the first two months of the year compared with zero in the same period of 2010. The amount of local-currency debt issued in Shanghai rose 13 percent to 267.5 billion yuan.
Shanghai will focus on onshore financing activities, while Hong Kong is developing offshore yuan business with help from Shanghai, Tsang said.
Tsang also said today residents “welcome” the city’s budget revision as this could benefit many groups and his government will listen to different opinions.
Thousands of people marched in Hong Kong yesterday, protesting against the government budget four days after Financial Secretary John Tsang announced HK$40.5 billion ($5.2 billion) in cash and tax rebates, while scrapping an earlier budget proposal to inject money into workers’ pension fund accounts.
--Bonnie Cao, Sophie Leung, with assistance from Eva Woo. Editors: Dirk Beveridge, Paul Panckhurst
To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net
To contact the editor responsible for this story: Paul Panckhurst in Hong Kong at ppanckhurst@bloomberg.net
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