Amid turbulence in international financial market, progress of China's economic reform and changes in global economic configuration became a focus of discussion at the 2016 Golden Bauhinia International Financial Forum and the awarding ceremony of China Securities Golden Bauhinia Awards held in Hong Kong yesterday. In particular, when Donald Trump who advocates to put "America first" enters the White House, globalisation of free trade is likely to suffer a setback, then the "One Belt One Road" strategy initiated by China to promote trade and investment liberalization and facilitation will become the main force to resist the anti-globalisation tide.
In fact, following the U.S. pulling out of the Trans-Pacific Strategic Economic Partnership Agreement [Trans-Pacific Partnership or TPP], markets becomes concerned with the fate of the North American Free Trade Agreement (NAFTA), as Trump may ask to scrap it and start all over again in order to protect domestic job market. If things go on like this, the global multi-lateral trade system is bound to suffer heavy blows and trade protectionism to run even more rampant. This explains why stocks and currencies of emerging markets that rely on exports to stimulate their economic growth are under the pressure of capital outflow.
Amid this round of capital outflow from emerging markets, however, there is no big turbulence in China's stock and foreign exchange markets. Instead, A-share gradually returns to a "slow bull" market which has grown to a 10-month high, while the CFETS RMB Index, which measures the yuan's performance against a basket of currencies, has remained stable in recent months. Although the yuan's exchange rate against the US dollar has declined more remarkably to reach an eight-year low, this is mainly due to a stronger US dollar not because of problems with the Chinese economy. Therefore, even when the yuan weakens against the greenback, short-selling speculators dare not do what they wish without restraint.
As the largest of the emerging economies, China's economy maintained a medium- and high-speed growth of 6.7 per cent in the first three quarters, which contributed to stabilising the world economy. The contribution of the Chinese economy to global economic growth this year is estimated to be more than 30 per cent.
As a matter of fact, three factors support the Chinese economy to grow steadily and change for the better. One is that there are positive changes in economic restructuring, industrial upgrading and restructuring and momentum shift for economic growth: the weight of the tertiary (services) industry in gross domestic product (GDP) further increased to 53 per cent in the first three quarters. The second is that innovation stimulating growth begins to take effect: China's new economic sectors grow fast with the rise of new industries such as in high and new technologies and equipment manufacturing. The third is the steady advance of the "One Belt One Road" strategy. This platform to promote interconnection and intercommunication in trade and investment and seek cooperation and win-win is already joined by more than 100 countries and international organisations. In addition, with the operation of the Asian Infrastructure Investment Bank (AIIB) and the establishment of the Silk Road Fund, a great number of investment projects have materialised and begun to make economic and social returns, which will inject a new driving force for growth into the Chinese economy and the world economy. The "One Belt One Road" strategy helps promote globalisation and bring a new dynamic to the world economy.
As Professor Ceajer Chan Ka-keung, the Secretary for Financial Services and the Treasury, said at the Golden Bauhinia International Financial Forum yesterday, amid the upsurge of anti-free trade waves in Europe and U.S. keep upsurge , the "One Belt One Road" advocated by China pushed forward interconnection of trade and peoples, which brought a positive force to consolidate trade liberalisation.
Hong Kong as a supporter of free trade is duty-bound to actively participate in and promote globalisation. In particular, in the implementation of the "One Belt One Road" strategy, Hong Kong can play an important role as a super-connector. At present, how to strengthen Hong Kong's status as a global off-shore RMB business hub and international asset management centre is the priority among priorities, which is a matter of fate concerning Hong Kong's economic development in several decades to come.
24 November 2016
