Li Ka-shing, Asia’s richest man, said Hong Kong needs to raise its competitiveness if it wants to avoid losing out to Shanghai, where China is setting up a free trade zone, Radio Television Hong Kong reported.
Li, the 85-year-old chairman of Hong Kong-based Cheung Kong Holdings Ltd. and Hutchison Whampoa Ltd., said the Shanghai free trade zone “will affect Hong Kong heavily,” RTHK reported on its website, citing comments Li made at a briefing yesterday.
The zone may allow freer yuan convertibility, liberalize interest rates and relax restrictions on foreign investment, which may threaten Hong Kong’s status as China’s biggest financial center. The former British colony risks falling behind its rivals if citizens there don’t start rallying behind Chief Executive Leung Chun-ying, a Chinese official said yesterday.
“China is a big market and in the long term it can’t just rely on Hong Kong as its only hub,” said Kevin Lai, a Hong Kong-based economist at Daiwa Capital Markets Ltd. “I worry more about the deteriorating political environment in Hong Kong than about Shanghai establishing a free-trade zone.”
Leung’s government has increasingly been drawn into a debate about the speed of electoral reform, as opposition lawmakers press for the open nomination of candidates for the election of Hong Kong’s next leader in 2017, rather than by committee as legislated.
Li said that Occupy Central, the movement proposed by some civic groups to pressure the Hong Kong government into accelerating the introduction of full democracy, may damage the economy and the city’s reputation as a financial center, according to the RTHK report.
Hong Kong residents should focus on the economy rather than politics, as Singapore leapfrogs the Chinese city as a financial center by many measures, the Standard newspaper reported today, citing remarks made to a business delegation by Wang Guangya, director of the Hong Kong and Macau Affairs Office.
The city should give more support to Leung, he said.
Still, Hong Kong won’t lose out even as the Chinese government supports cities including Shanghai, Wang said yesterday, according to Chan Wing-kee, a member of the business delegation.
“People have talked about Hong Kong facing competition from Shanghai for many years,” said Daiwa’s Lai. “Hong Kong’s advantages won’t change too much in the coming five to ten years because it has unique characteristics such as good rule of law.”
Shanghai’s free-trade zone may liberalize 19 industries from banking to shipping and allow freer convertibility of the yuan, according to a draft plan seen by Bloomberg News. The government hasn’t released details of what the area will offer or how long it may take for the policies to be implemented.
Detailed guidelines won’t be announced with the official start of the zone at the end of the month, and would be released later, China Daily said today, citing Kuai Zhenxian, an economist with Shanghai Waigaoqiao Free Trade Zone Development Co.
The trade zone, which may push forward China’s goal of making Shanghai a global financial center by 2020, will help improve the country’s competitiveness, World Bank President Jim Yong Kim said this month. China’s economy expanded 7.7 percent last year, the slowest since 1999.
An opening ceremony for the 29-square kilometer (18-square mile) free-trade area will probably take place at the end of this month and will be attended by Premier Li Keqiang, two people with knowledge of the matter said last week. The zone is located in the eastern side of the Pudong New Area along the Yangtze River.
Li Ka-shing said yesterday he won’t move Cheung Kong and Hutchison Whampoa away from Hong Kong, RTHK reported. Asked about the sale of ParknShop, one of Hong Kong’s two biggest supermarket chains, Li said it was a “commercial decision.”
Hutchison Whampoa, Li’s biggest company, last month received at least eight offers for ParknShop, according to people with knowledge of the process.
Hong Kong’s home prices have more than doubled since early 2009 and are highest among major global cities, according to a Savills Plc report in March. The government has imposed measures including extra taxes on foreign property buyers and higher mortgage down payment requirements as it seeks to reduce the risk of an asset bubble.
Li, whose Cheung Kong is the city’s second-biggest developer by market value, said the impact of those measures will show next year, declining to predict how home prices will perform, RTHK said.