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Hong Kong will stay China’s financial gateway to the world, former top banking official says

South China Morning Post logo South China Morning Post 11/7/2020 Frank Tang frank.tang@scmp.com
a tall building in a city: Liu Mingkang says Hong Kong’s financial status is based on the rule of law, which made business predictable, and personal freedom. Photo: Roy Issa © SCMP Liu Mingkang says Hong Kong’s financial status is based on the rule of law, which made business predictable, and personal freedom. Photo: Roy Issa

Hong Kong will continue to be an international financial centre in parallel with New York and London, and remain an important financial gateway for China to connect the rest of the world, a former top banking official said on Saturday.

Liu Mingkang, former chairman of the China Banking Regulatory Commission, offered the assessment in an online forum, saying he "was very disappointed at recent discussions about (the weakening) financial role of Hong Kong".

"People circulating those views don't know economics, finance, or politics ... Dissemination of such views on the mainland and in Hong Kong is harmful," he said at the forum hosted by the Chinese University of Hong Kong's Shenzhen Finance Institute.

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Liu said Hong Kong's financial status was based on the rule of law, which made business predictable, and personal freedom. It was also supported by its use of English and application of common law.

Hong Kong had also been the world's top centre for initial public offerings six times in the past 10 years, proving the city's attraction to global investors.

"If more Chinese companies returned (from the US), Hong Kong could grab another No 1 title next year," he said.

Beijing's proposed security law received mostly positive response from clients of Hong Kong's banking and wealth sectors, finance chief says

Hong Kong's role as a financial centre has been a question of intense debate since the introduction of the controversial national security law at the end of last month.

The United States has already ended the former British colony's special trading status and threatened financial sanctions on individuals and institutions, citing the erosion of the city's autonomy.

Some advisers to the US administration are also pushing to undermine Hong Kong's 37-year-old peg to the US dollar, Bloomberg reported earlier this week.

Meanwhile Shanghai has ambitions to become an international financial centre and the southern island of Hainan has been designated as a free-trade zone.

But Liu said Hong Kong was part of a bigger strategic plan.

"The Greater Bay Area has Hong Kong and Macau, which makes it totally different from Shanghai," Liu said, referring to a central government development plan to link a series of cities in southern China. "It's too early for Hainan (to join the race)."

Hong Kong national security law official English version:

The central government has voiced support publicly for Hong Kong's role as a financial gateway. In addition to the existing stock and bond connect schemes linking mainland investors with markets via Hong Kong, the central bank launched a "wealth management connect" late last month, which may allow foreign wealth managers to offer products through the city to some mainland clients.

Liu said that there was potential to expand the connect mechanism to insurance and commodities. However, closer cooperation was needed to improve financial infrastructure and joint oversight.

He said the Greater Bay Area must take action to counter the US' long-arm jurisdiction and implement measures to improve cybersecurity, prevent money laundering and counter terrorism financing based on United Nations Security Council resolutions. The area must also follow international rules and practices in areas such as accounting, auditing and arbitration.

A joint early warning system was also needed to identify the risks of cross-border enterprises and cases similar to Luckin Coffee, a Chinese company that was delisted after it was found to have inflated its sales.

In addition, Liu highlighted the need for access to information.

"Financial professionals should be able to access both international and domestic information platforms. If international professionals can't use Facebook, Twitter or Bloomberg in mainland cities in the Greater Bay Area, how can they find opportunities and identify risks in the global market?" he said.

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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

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