Hong Kong can contribute to advancing national strategies in three aspects, including the offshore yuan business, as the city is reaping the fruits of national development, Financial Secretary Paul Chan Mo-po said on Sunday.

“The Hong Kong Special Administrative Region must integrate the institutional advantages of ‘one country, two systems’, internationalization and its edges in the financial and professional services industry, along with the new opportunities brought about by the country’s steady and high-quality development, to make more solid and long-term sustainable contributions to overall national development,” Chan said in his weekly blog.

“This will create a new growth curve for the SAR in the future,” he said.

The first aspect is promoting internationalization of the renminbi, as well as the interconnectivity of financial markets. Hong Kong is already a global hub for the offshore renminbi business as the city conducts more than 70 percent of global offshore renminbi payments and settlements. The monthly renminbi settlement volume of interbank settlements in the SAR exceeds 41 trillion yuan ($6.04 trillion) -- equivalent to two trillion yuan in settlement volume on every business day.

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As a result, two-way flows of people and goods, trade settlement and cross-border fund transfer management needs will further increase.

“As the country continues to expand its high-level opening-up, more foreign companies are investing and expanding their businesses on the Chinese mainland. Chinese companies’ high-end manufacturing, and consumer and technological products, as well as commercial services, are becoming more popular in foreign markets, prompting more mainland companies to expand their global business,” Chan said.

The HKSAR government will step up promotion efforts to encourage companies to use offshore renminbi more in trade and investment financing and strengthen cooperation with more central banks in the region.

“The Hong Kong Fixed Income and Currency (FIC) and the Bond Connect Summit, to be held on Tuesday, will discuss the development of the Hong Kong bond market and the offshore renminbi market,” he said.

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The Hong Kong Monetary Authority’s renminbi business funding arrangements allow banks to obtain renminbi funds at lower interest rates that will further support companies’ trade finance and working capital needs. Some Hong Kong banks have grasped this cutting-edge model to serve more clients and expand their business scope, the finance chief said.

Hong Kong’s second contribution is to participate in the construction of the national modern industrial system. The city possesses an international research environment and talent pool, a common law and intellectual property protection system, a mature capital market, and is promoting the development of the Northern Metropolitan Area and actively developing a patient capital and venture capital fund ecosystem.

“If Hong Kong's basic research, talent, capital, international innovation resources and market network can be more efficiently integrated with the industrial capabilities and application scenarios of the Guangdong-Hong Kong-Macao Greater Bay Area and even the whole country, Hong Kong can play a more active role in the construction of the national modern industrial system,” Chan envisaged.

Hong Kong can leverage its international and professional service capabilities to support broader regional and global cooperation.

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Currently, the world still faces severe development imbalances, with many regions still focusing on infrastructure development, industrial upgrading, and improving people's livelihoods. Global South countries also face challenges such as financing difficulties and lagging infrastructure development.

“Hong Kong has many years of experience in financing, risk management, ESG (environmental, social and corporate) compliance, project management, law and dispute resolution. Through the Belt and Road Initiative, multilateral development banks and various international cooperation platforms, Hong Kong can apply these professional capabilities to practical projects, facilitating more businesses and regions in exploring sustainable and feasible cooperation solutions,” Chan said.

The “one country, two systems” framework also offers institutional support for Hong Kong’s unique advantages and prosperous and stable development. “No other city in the world is as deeply integrated into the country’s economic development and governance system as Hong Kong, while also seamlessly connecting with international rules and markets,” he said.

“Hong Kong is authorized and established under ‘one country’, yet it adheres to the common law and free port system within the ‘two systems’ framework. The SAR is also a participant in the domestic circulation and a node in the international circulation,” Chan said.