The Belt and Road Initiative: Opportunities and Challenges NICHOLAS KWAN 關家明 DIRECTOR OF RESEARCH 研究總監

The Belt and Road China’s Re-globalisation Initiative Source: HKTDC

Key Points Open, inclusive, mutually beneficial Base on but not limited to the old silk roads Fully utilize market mechanism, follow international common practices Five connections: policy, facility, trade, finance, people Source:<推動共建絲綢之路經濟帶和21世紀海上絲綢之路的願景和行動>

Global De-Globalisation Cross border bank lending (US$ trn) 40 35 30 25 20 15 10 5 Source: BIS

Global De-Globalisation World Exports (% of world GDP) 30 25 20 15 10 5 1870 1913 1950 1973 1998 2008 2009 2013 2014 2015 Sources: WTO, HKTDC 5

New Trade Regimes Regional, Plural, Multilateral Source: Google

New Financial Architecture

New Economic Balance Source: Google

New World (Dis)Order Source: Google

Hong Kong’s Unique Roles in BRI Promote international participation Facilitate the use of market forces Manage cross-border risks

Key Contributing Sectors Logistics International finance Legal arbitration Infrastructure services Trade and commerce Cross border investment

Logistics Free port (goods, capital, information) Independent tariff area Foreign economic agreements Aviation 65 countries (34 BRI) Aviation income 30 (11) Tax 32 (10) Visa free 152 (42) Free trade 6 Investment protection 17 (2)

Infrastructure Services Airport (Shanghai, Hangzhou, Zhuhai) Rail (Beijing, Shenzhen, Hangzhou, Sweden, UK, Australia) Port (26 countries) Power (China, India, Taiwan, Indonesia, Australia) Telecom (Austria, Indonesia, Italy Sri Lanka, Vietnam, Sweden, Ireland, Denmark, UK)

International Finance World 1st IPO centre World 1st offshore RMB centre World 5th forex trading centre World 7th bank centre Asia 2nd asset management centre Asia 2nd private equity centre Issue and manage HK dollar HKD freely convertible, no exchange control Fiscal autonomy, independent tax system Autonomy to manage and use public reserves

Cross-border Investment Outward direct investment (end-2015 stock) Country/area US$ billion US 5,983 Germany 1,813 UK 1,538 Hong Kong 1,486 France 1,314 Japan 1,227 Switzerland 1,138 Canada 1,078 Netherlands 1,074 Chinese mainland 1,010 World 25,045 Source：UNTACD 2016 World Investment Report

Regional Trade and Commerce Regional HQs and offices (3800) Foreign consulates and rep offices (122) Foreign residents (500,000) Foreign business visitors (7 mn) Overseas commercial offices (60+) HK Business Association members (11,000)

Legal and Arbitration A major international arbitration centre A member of NY Convention An independent judiciary system

New Balance Beyond New Normal

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