Hong Kong’s bid to join RCEP trade bloc receives warm response, chief executive says
South China Morning Post | 10 July 2024
Hong Kong’s bid to join RCEP trade bloc receives warm response, chief executive says
by Enoch Yiu
A majority of the members of the Regional Comprehensive Economic Partnership (RCEP) have responded positively to Hong Kong’s application to join the trade bloc, the city’s Chief Executive John Lee Ka-chiu said at a conference on Wednesday.
For the past two years, Hong Kong officials including Lee have been advocating for the city to join the RCEP, which is the world’s largest free-trade pact, encompassing all 10 Asean member states plus China, Japan, South Korea, Australia and New Zealand.
“Hong Kong in 2022 applied to join the RCEP, which promotes regional cooperation,” Lee said in a speech at the Chinese General Chamber of Commerce World Chinese Entrepreneurs Summit in Hong Kong. “The city can contribute a lot to the members of the region in areas such as supply chain management, financial services and fintech development.
“With backing from the Central Government and the efforts of all the parties involved, a majority of RCEP members, including all Asean members, have responded positively to Hong Kong.”
Hong Kong has a sound legal system, free trade, and a good business environment, Antony Chan, vice-president of the Federation of Filipino-Chinese Chambers of Commerce and Industry, said during a panel discussion at the summit.
“Hong Kong has so many advantages that I could not think of any reason not to let Hong Kong join the RCEP,” he said.
The city’s active financial market, large pool of professionals and unique role under the “one country, two systems” regime make it the only city in the world to connect mainland China and the world, Lee said.
“The population, economic output and trade volume of RCEP represents 30 per cent of the world,” he said. “Hong Kong and RCEP members also have close trade relationships, with bilateral trade volume reaching nearly US$800 billion, representing 40 per cent of all trades in Hong Kong.”
The city can offer a lot of benefits RCEP members, including acting as a wealth-management centre, a venue for companies to go public and a source of green financing and fintech innovation, according to speakers on another panel focused on how Hong Kong’s financial services industry can help RCEP members capture market opportunities.
“The RCEP is the fastest growing region in the world, and it has created a lot of wealth,” said Secretary for Financial Services and the Treasury Christopher Hui Ching-yu. “Hong Kong can act as a wealth-management centre for these countries. Hong Kong has introduced a lot of law changes and incentives to attract more private equity firms, family offices and listings of new-economy companies and exchange-traded -funds.”
The city is also a green financing hub that companies across the RCEP can use to issue green bonds and other financial products to raise funds for their efforts to cut emissions and develop clean energy, Hui said.
Bourse operator Hong Kong Exchanges and Clearing (HKEX) has implemented listing reforms since 2018 to allow biotechnology companies and companies with different classes of voting rights to list, said Wilfred Yiu Ka-yan, HKEX’s deputy CEO. Since last year, it has also allowed pre-revenue technology companies to raise funds.
“Hong Kong has a super well designed model ecosystem,” Yiu said. “The listed market and the over-the-counter market cover a wide spectrum of stocks, bonds, derivatives and ETFs.”
These provide issuers around the world with many vehicles to raise funds to meet their financial needs, while also giving investors exposure to these companies, Yiu said.
Fintech is another area where Hong Kong can work with RCEP members, said Chan Ka-keung, chairman of digital lender WeLab Bank and former secretary for financial services and the treasury.
“Hong Kong is a first mover in developing digital banks and is also working on a lot of projects in cross-border digital payments, e-HKD and others,” he said. “We can have a lot of cooperation with companies in RCEP member countries to promote fintech development in the region.” He cited his own company’s investment in digital banking in Indonesia last year as an example.
