One Belt One Road (also known as New Silk Road) is the latest hot development strategy and framework proposed by the Chinese government. It focuses on cooperation and infrastructure along the land (the “belt” connecting China, Central Asia, Russia and Europe) and sea (the “road” linking China to ASEAN, India, Africa) trade routes. The purpose is to sustain the investment and growth in China as well as to stimulate economic and financial integration internationally.
One Belt One Road – the roles of Hong Kong
It is anticipated that China’s investment on infrastructure along the new land and sea silk roads should boost foreign demand and trade flows. Hong Kong, as a world class financial, commercial and maritime centre, can provide Mainland enterprises that seek to “going out” with a wide range of professional services and achieve a healthy growth on both financial and non-financial aspects, for instances, facilities connectivity, investment & trade co-operation, people-to-people bonds.
The following are reasons why Hong Kong would be the ideal place:
1. Hong Kong, strategically located in Asia
Hong Kong is well-known for its free port as it is strategically located in the heart of Asia and adjacent to Mainland. With its strategic geographical location, Hong Kong has been successfully transformed into a global trade and logistics hub throughout the years, and finally build a competitive advantage across the globe.
2. Facilities connectivity, investment & trade co-operation
The Silk Road Economic Belt Initiative focuses on infrastructure development, especially the regional transportation and connectivity projects along the Belt and Road countries. Hong Kong as the world’s equity funding leader, will be able to support mainland enterprises in raising capitals for infrastructure spending and leading renminbi (RMB) internationalization.
Hong Kong has become the most comprehensive and competitive platform for offshore RMB business. As of 2014, offshore RMB deposits has exceeded 2 trillion yuan, of which over 1.16 trillion yuan are deposited in Hong Kong, and the cross-border RMB payment between China and Hong Kong accounted for 52.7% across all offshore regions.
Hong Kong also plays an important role in information sharing and helps Mainland enterprises to acquaint itself with the international market rules in the “going out” process.
3. Skilled Staffs
Hong Kong has been actively developing its international business and has gained valuable operational experience over the years.
There is a large pool of local sophisticated and experienced professions who understand the Western or Chinese business culture difference will be able to assist Chinese enterprises in the endeavors in the “go out” process. Hong Kong can serve as a liaison platform in satisfying the demand derives from the Initiative.
Conclusion
In recent years, the Chinese government encourages the local enterprises to “go out to invest”, and the demand for outbound expansion in Mainland is surging. In the process of going out, Hong Kong has naturally become an ideal platform due to its developed financial system, no money flow restriction and excellent professional services.
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