FST speech to the Hong Kong Trade Development Council Dinner: 27 September 2018
Mel Stride delivered a speech on the relevance and potential of the UK-Hong Kong relationship.
Introduction
Chief Secretary, distinguished guests, Lords, ladies, gentleman, it is a pleasure to address you this evening.
As a finance minister, I am often told to keep things small, not big.
As the Minister responsible for taxation, I look to Hong Kong for inspiration.
Because your tax code is 270 pages. Our is 17,000.
So I have some lessons to learn!
One Country, Two Systems
Ladies and gentlemen, over twenty years ago Deng Xiaoping and Margaret Thatcher agreed the principle of 鈥淥ne Country, Two Systems鈥� 鈥�
鈥 structure designed to protect Hong Kong鈥檚 high degree of autonomy, independent judiciary, rule of law, and rights and freedoms of its residents and others in the Special Administrative Region.
And at the time, of course, it was not without its critics鈥�
鈥any people felt a sense of trepidation about what was to come鈥�
鈥ith some prophesising a highly regulated economy or indeed, even economic decline.
But the critics have been proved wrong, and Hong Kong has indeed stood the test of time.
鈥淥ne Country, Two Systems鈥� has protected the success of Hong Kong鈥�
鈥nd it is vital that this continues鈥�
鈥s part of the faithful implementation of the Joint Declaration.
More than ever, Hong Kong has been characterised by strength and prosperity.
Today it stands as one of the most thriving and energetic cities in the world鈥�
鈥ike London, a global financial powerhouse鈥�
鈥nd the gateway to China 鈥� one of the biggest markets in the world.
And more than ever, we should perhaps reflect on Hong Kong鈥檚 legacy鈥�
鈥nd take on board the lessons of history.
Because in the immortal words of Mark Twain, history doesn鈥檛 repeat itself 鈥� but it does rhyme.
As the UK prepares to the leave the European Union鈥�
鈥o face the world 鈥�
鈥e acknowledge that we will always be a part of Europe鈥�
鈥ut we are ready to take control of our future鈥�
鈥s a sovereign nation, as Global Britain.
Just as Hong Kong challenged the naysayers all those years ago鈥�
鈥ur country has the chance to do precisely the same.
The ties that bind us together
Chief Secretary, by geographic fate, the UK and Hong Kong stand as lighthouses in our regions鈥�
鈥ordered by sea, gateways to commerce, with a shared history of entrepreneurship.
But geo-politics is not the only thing that binds us鈥�
鈥� because we both share certain special qualities.
We are filled with a sense of determination, of adventure, and in our economic affairs 鈥� an unwavering commitment to cross-border trade.
These are qualities that will allow the UK and Hong Kong to survive the turbulence of the 21st century鈥�
鈥nd grasp the opportunities it undoubtedly presents. And, as the UK faces a time of unprecedented change in her history, we are looking to our international partners鈥�
鈥nd especially to those with which we have deep historic ties.
The enduring relationship between the UK and Hong Kong has its foundation in a shared history鈥�
鈥ut it has grown into so much more than that.
Just look at the 300,000 British citizens resident in Hong Kong鈥�
鈥o the tens of thousands of Hong Kong students who study in the UK every year鈥�
鈥o the British Council鈥檚 Festival of Ideas next January 鈥� which will showcase the best of UK creativity and innovations.
So, we have a strong base of shared values鈥�
鈥nd a legacy of exchange 鈥� be it of ideas, culture or people.
But as a Treasury Minister, it is the continued strength of our economies鈥�
鈥nd the two-way flow of trade and investment upon which I want to focus on this evening.
Tapping into new markets together
Our two great economies are deeply intertwined鈥�
鈥ong Kong remains the UK鈥檚 second largest export market for goods in the APAC region鈥�
鈥nvestment from Hong Kong into the UK has increased by 35% since 2010鈥�
鈥nd Hong Kong is home to over a third of all British investment in Asia.
And as we leave the European Union, we will look to further enhance our partnership with Hong Kong. Because despite appearances, no financial centre is an island鈥�
鈥oth the UK and Hong Kong are leading global hubs鈥�
鈥n facilitating trade and prosperity throughout Europe, Asia and beyond.
And we are stronger when working together.
Through the annual London-Hong Kong Financial Forum, we have committed to explore and capitalise on the issues facing our financial industries.
It is only by harnessing the forces set to reshape financial markets 鈥� rather than avoiding them 鈥� that we can continue the UK and HK鈥檚 mutually beneficial relationship.
Globalisation, climate change, infrastructure, technology鈥�
鈥hould be taken and acknowledged for what they are鈥�
鈥s opportunities to seize.
Take for example the untapped potential of green finance鈥�
鈥nd the role it could play in funding 21st century corporates鈥�
鈥nd facilitating infrastructure projects worldwide.
In Asia 鈥� this could range from the Greater Bay Area to the trans-continental Belt and Road Initiative鈥�
鈥nd here at home, I am proud to see green finance being put to use as we build the UK鈥檚 Northern Powerhouse.
Green finance has the potential to be a rapidly expanding force of financing.
To meet the infrastructure needs of developing Asian economies would require $1.5 trillion in investment per year until 2030.
We should all rise to the challenge as to how green finance can be targeted to plug that gap.
This vision will only be attained if leading financial centres 鈥� like London and Hong Kong 鈥� work in tandem to scale-up the sector鈥�
鈥nd foster the right environment for a competitive green marketplace to emerge.
Green finance of course is but one area of innovation that the UK and Hong Kong can capitalise on.
At this dinner last year, the UK-Hong Kong FinTech Bridge was witnessed by the Chief Executive and the Chancellor of the Exchequer鈥�
鈥o enhance connectivity鈥�
鈥ool our mutual expertise鈥�
鈥nd permit our firms to access the capital, talent, accelerators and start-ups in both jurisdictions.
The bridge that extends between us will apply cutting-edge technology to turbo-charge our financial industries.
I am a great believer that FinTech has enormous power to transform international finance鈥�
鈥nd create a more efficient, productive and bespoke industry for corporates and consumers.
So I am thrilled that the UK and Hong Kong remain at the frontier of this sector.
In the months and years ahead, green finance and FinTech are but two aspects of an ambitious bilateral agenda.
I welcome the Chief Executive鈥檚 support of our Strategic Dialogue on Trade Partnership鈥�
鈥hich gives us a way to identify and address any remaining barriers to trade between the UK and Hong Kong.
And we are preparing for the 8th London-Hong Kong Financial Forum鈥�
鈥orking to ensure corporates and investors can access new opportunities鈥�
鈥nd delivering the innovation and thought leadership necessary to meet challenges bigger than any one financial centre.
Because the joint investment opportunities are vast 鈥� just take the rise of China.
It is expected that up to $600 billion in foreign funds will enter the Chinese stock market in the next 5 鈥� 10 years鈥�
鈥hannelled through Stock Connects that are operational in Hong Kong鈥�
鈥nd soon to launch in London.
Already around 60% of all Chinese capital flows through Hong Kong鈥�
鈥ften hiring UK professional services firms as intermediaries and advisers.
The opportunities to fully explore the potential of investment in China 鈥�
鈥s something we should both consider a priority in the years ahead.
I know I speak on behalf of the Chancellor and the Government when I say that we are committed to exploring the synergies between Hong Kong and Global Britain鈥�
鈥ollaborating to bring us both greater prosperity and competitiveness.
Conclusion
So, to conclude this evening, I want to share this quote with you:
鈥淏ritain must always think and act internationally. But rather than rely on our influence within the confines of a narrow Europe I would have us fulfil our destiny as a nation with global interests and a special understanding of the world derived from our history.鈥�
That was Margaret Thatcher speaking in Asia before the handover of Hong Kong in 1997.
And her words have never been more relevant.
As we prepare to face the world as Global Britain, eager to embrace the opportunities this country voted to explore鈥�
鈥e are looking beyond Europe; we are looking East.
There has never been a better time to unlock the full potential of our relationship with Hong Kong, a natural ally in the East.
I look forward to strengthening the bonds between us鈥�
鈥or the years to come.
Thank you all very much.