One week’s work nets about $10.35 billion

When Chief Executive (CE) John Lee stepped off his plane in Hong Kong, he was full of smiles. He had just completed a very successful trade mission to Central Asia worth about HK$10.35 billion and saw the signing of 96 agreements and Memorandum of Understanding (MOU) covering investment, aviation, cultural exchange and customs. Not bad for one week’s work.

Lee was the leader of a 70 member-strong delegation of officials, businessmen and women and cultural managers from both Hong Kong and the mainland. It was an action-packed series of meetings, banquets and visits to the two key Central Asian cities of Kazakhstan and Uzbekistan.
The trip was so successful that Hong Kong’s status as a “super-connector” has been upgraded a “super-value-adder agent,” proactively integrating into the “Silk Road Economic Belt,” and strengthening its functional platform role within the “Belt and Road Initiative.”

There are a number of similarities between Hong Kong and Kazakhstan which make partnerships there more palpable. The Astana International Financial Centre (AIFC), a special economic zone in the capital, applies common law and international arbitration, as well as special tax and currency regulatory regimes, and houses the Astana International Exchange.

A major item on the agenda was with Hong Kong’s three major innovation and technology parks (Cyberport, Science Parks, and Hong Kong-Shenzhen Innovation and Technology Park), who signed a technology cooperation pact with Kazakhstan, enabling mainland technology firms to connect with Central Asia through Hong Kong and advance cooperation in artificial intelligence and digital infrastructure. Kazakhstan will hold a roadshow in Hong Kong to attract investors and professional service institutions next year.

Central Asia can become a strategic logistics hub for Hong Kong as wars in the Middle East and Europe persist, with cargo volume between the city and two countries in the region surging nearly fivefold year on year.

With this in mind, the Hong Kong Airport Authority and Cathay Pacific secured operational agreements with Almaty International Airport in Kazakhstan. Cathay announced that it plans to operate three direct flights per week connecting Hong Kong to Almaty, starting in the first quarter of next year.

Several business entities among the delegation signed individual MOUs with their counterparts in the two countries, covering sectors such as finance, asset management, aviation, media, agriculture and new energy.

MOUs, a common vehicle used for cooperation between parties, are usually non-binding and outline only broad intentions and mutual understanding. These are often upgraded to Memoranda of Agreement (MOA) which is more detailed and often includes legally enforceable obligations.

A number of the agreements were signed by state-backed investment bank China International Capital Corporation Limited (CICC) as well as their Kazakh partners, including one with the Sovereign Wealth Fund Samruk-Kazyna.

The Chinese Manufacturers' Association of Hong Kong, the Federation of Hong Kong Industries and the Hong Kong General Chamber of Commerce also secured deals.

During the visit, coordinated and promoted by senior Hong Kong government officials, Shandong-based private enterprise Xinfa Group reached an agreement with Kazakhstan to invest about HK$117.5 billion in developing a large-scale industrial park spanning over 3,000 hectares, encompassing the entire industrial chain from mining and smelting to new materials manufacturing. The Hong Kong platform acted as the liaison point for the Kazakh investment negotiations, financing plan coordination and legal framework setup, highlighting Hong Kong’s vital role in supporting mainland asset-heavy enterprises to expand internationally.

For the first time, two local news bodies, the Newspaper Society of Hong Kong and the Hong Kong News Executives’ Association, signed an MOU with one of Kazakhstan’s largest state-owned conglomerates to strengthen collaboration in journalism and information exchange. Separately, the South China Morning Post sealed a partnership with Astana International Financial Centre Authority to boost ties between Central Asia, Hong Kong and mainland China, and entered into an agreement with the Autonomous Cluster Fund “Astana Hub”, alongside Gobi Partners and the Khan Tengri Innovation Hub of China, to strengthen economic and business ties.

The visit exemplified a proactive effort and successful practice in cementing Hong Kong’s positioning and fulfilling national missions. The upgrading from a “super-connector” to a “super-value-adder agent,” proactively integrates the “Silk Road Economic Belt,” and strengthening its functional platform role within the “Belt and Road Initiative.” This aligns closely with the national “15th Five-Year Plan” directives.

“Central Asia could be the next Middle East, becoming a terminal connecting Asia and Europe,” the HK Airport Authority chairman Fred Lam told a radio programme, citing the region’s location sitting between the Middle East and Russia, both of whose cargo businesses were disrupted by military conflicts.

Chief Executive John Lee said the trip had numerous achievements, including cooperation at government level, and expediting consultations on signing a comprehensive double taxation avoidance agreement as well as discussions on an investment protection agreement.

Diplomatically, Uzbekistan agreed to set up a consulate in Hong Kong next year.

It is unlikely for Hong Kong to secure immediate gains from the developing Central Asian region but one can argue that a farsighted view is needed. As the offshore renminbi market continues to deepen, Hong Kong can provide diverse support for enterprises in terms of financing, onshore and offshore bond issuance, and cross-border cash management.

Mark Pinkstone

** 博客文章文責自負,不代表本公司立場 **

When China’s Paramount Leader Deng Xiao Ping floated the idea of one country two systems for the future of Hong Kong, the west scoffed at the possibility of a communist regime and a capitalist bastion living hand in hand. Some 29 years later the prophets of doom were proven wrong as Hong Kong is now more prosperous than ever and it’s future will be more so.

For more than 150 years Hong Kong lived under a British colonial rule. There was no democracy, only authoritarian management. The succession of ruling governors were hand-picked by the Foreign and Commonwealth Office and appointed by the Prime Minister, without any consultation with the people of Hong Kong.

But the people of Hong Kong didn’t mind. If they had never seen democracy, how could they miss it. The governors were diplomats and their upper-crust training ensured that the natives were happy and that their rice bowls were filled. The diplomats got on well with the Chinese government as they knew that harmony was the key component to a successful relationship.

Then came along a politician for the first time to run Hong Kong in the name of Chris Patten, who had lost his seat in the Bath electorate, about 156 km west of London. John Major was Prime Minister at the time and a good friend of Patten. So, to make up for the political loss in Bath, Major offered Patten the cushy job of being governor of Hong Kong.

In 1992 Patten and his family arrived in Hong Kong and as a typical politician, he arrived like a bull in a china shop (pun intended). There was no diplomacy involved. Patten and Major had decided that the foreign office diplomats were pussy-footing with the Chinese during the previous decade negotiating Hong Kong’s future and a firmer stand was necessary.

Unlike his predecessors, Patten knew nothing of Chinese traditions and customs. He just could not understand Chinese mentality and that applied not only to the mainlanders but also the local Chinese. The East is East and the West is West and never the twain shall meet wrote poet Rudyard Kipling in 1889. But, in Hong Kong they did.

The Joint Declaration between Great Britain and China on the future of Hong Kong and the subsequent Basic Law (Hong Kong’s mini constitution) provided the pathway for Hong Kong’s future, including democratic elections for the city’s legislative council. But Patten was impatient and decided to introduce a fully elected legislature in 1995 immediately before the handover in 1997. This infuriated the Chinese-side, and they provided for a provisional legislature to replace Patten’s council as soon as Hong Kong was reverted to Beijing’s administration.

After 1997, Hong Kong formed its first directly elected Legislative Council in 1998, while the Chief Executive is elected by an Election Committee — a system similar to the U.S. presidential election. Hong Kong's Election Committee now has 1,500 members, whereas the U.S. Electoral College has only 538 members.

Since then, Hong Kong has flourished. The prophets of doom and Kipling were wrong. Despite many attempts by the west to dismantle the Deng formula Hong Kong is one of the most successful places on the planet. Year after year it is breaking records to the envy of many. Hong Kong has secured third place in the Global Financial Centres Index. In the latest World Competitiveness Ranking, Hong Kong's position has risen one spot further to rank second globally. And in the World Talent Ranking, Hong Kong has moved up 10 places to rank the fourth globally and the first in Asia. Hong Kong also continues to come first as the world's freest economy. And Hong Kong has what many want – stability.

The Hong Kong formula is unique and successful. Never tried before, it was seen as an experiment and the world was watching, waiting for it to fail. But the Hong Kong people are resourceful and will take any challenge head on. There is no failure.

The Hong Kong Special Administrative Region (HKSAR), established under the People’s Republic of China (PRC) Constitution, has maintained the previous capitalist system and way of life. Its common law system continues to operate, and it enjoys the free flow of people, capital, data, goods and more. The vibrancy and prosperity of the central government has always been Hong Kong's strongest backing.

Hong Kong’s 29th birthday under the PRC guidance, coincides with the 105th Anniversary of the Founding of the Communist Party of China. Naturally there have been celebrations all round, and justifiably so. Both Hong Kong and the central government are proud of what they have achieved. And both, particularly in the past year have taken top ranking as the preferred place in the world to trust and to do business.

Chief Executive John Lee, at a celebratory function on July 1 summed it up with: “Hong Kong, the Pearl of the Orient, will ride the wave of flourishing national development and sail with the wind, steering towards a brighter and more prosperous future!”

And the future is being mapped out in Hong Kong’s first five-year plan, currently under consultation with the public. The plan, a road map for future leaders to follow, will include a futuristic block of land, one third of Hong Kong’s total, to house high tech innovative research and development facilities with university, hospital and new town ancillary services. This Northern Metropolis straddles the river that acts as the boundary between Hong Kong and neighboring Shenzhen, with bridges linking the two; further proof that Hong Kong is an integral part of China.