MR CHAN KIN-POR (in Cantonese): Deputy President, first of all, I would like to thank Mr Christopher CHEUNG for proposing the motion today and Mr CHAN Chun-ying for proposing the amendment, so that we can take the opportunity of the Central Authorities’ launch of the Cross-boundary Wealth Management Connect to discuss how to promote the further development of Renminbi business in Hong Kong and enhance the status of Hong Kong as an offshore Renminbi centre.
As an international financial centre and the largest offshore Renminbi business hub in the world, Hong Kong has the responsibility and is best placed to promote the internationalization of Renminbi. In fact, as the economy of our country is growing stronger, Hong Kong has brought unprecedented opportunities to itself by assisting in promoting the international circulation of Renminbi. Apart from attracting more international financial business and international investors to Hong Kong, we can also attract Mainland enterprises to use Hong Kong to go global, thus stimulating the economic and trade development of Hong Kong and injecting new competitive elements into Hong Kong. This will benefit all industries and sectors.
In the 14th Five-Year Plan, our country has made it clear that it will strengthen Hong Kong’s status as a global offshore Renminbi business hub and support Hong Kong to enhance its competitive advantages. The Central Authorities have also taken immediate action by launching the Cross-boundary Wealth Management Connect Scheme in the Guangdong-Hong Kong-Macao Greater Bay Area, which will use Renminbi for cross-boundary settlement. The Wealth Management Connect will expand the scope of non-local Renminbi investments and further expand the mechanism for flow-back of Renminbi.
Hong Kong people’s demand for Renminbi continues to grow given the relatively high interest rates and relatively stable exchange rates. Currently, our Renminbi deposits have exceeded $800 billion, and it is believed that more and more people will save in Renminbi as our country’s economy grows stronger. In the investment market, the former Chief Executive of the Hong Kong Monetary Authority, Mr Joseph YAM, has proposed that the constituent stocks of the Hang Seng Index can be quoted, traded and settled in Renminbi at the same time. If the proposal is implemented, it will speed up the circulation of Renminbi in the capital market and greatly accelerate the internationalization of Renminbi. In addition, the Shenzhen Municipal Government is planning to issue offshore Renminbi bonds in Hong Kong. Though not being very large in scale, it is of great significance as it is the first Mainland municipal government to issue bonds in Hong Kong. In addition to diversifying Renminbi products in Hong Kong, it will also encourage more Mainland provinces and cities to issue bonds in Hong Kong, making the Renminbi bond market more active.
Similarly, there is also a strong demand for Renminbi insurance in Hong Kong. A survey indicated that as many as 45% of the respondents said they have a demand for Renminbi insurance products. According to the figures, new Renminbi premiums in 2017 were only amounted to $840 million, but the figure increased to $4.8 billion in 2019. In 2020, despite the impact of the epidemic, new premiums still reached $4.54 billion, reflecting the strong confidence in Renminbi insurance. The industry is also planning to expand its Renminbi insurance business and is currently waiting for the development of the Insurance Connect business.
Now that the Wealth Management Connect has been gradually implemented, the Government should discuss with the Mainland as soon as possible and study the details of the Insurance Connect. Not only does the insurance industry hope to participate in the development of the Greater Bay Area as soon as possible, but it also hopes to play a part in promoting the internationalization of Renminbi.
By making reference to the Wealth Management Connect, the industry hopes that the Insurance Connect can provide residents of the Greater Bay Area with the opportunity to purchase Hong Kong insurance products across the border. The Insurance Connect likewise uses Renminbi for cross-border settlement, and policyholders can choose to buy foreign currency-denominated insurance products. To facilitate supervision, a gradual approach can be adopted for the Insurance Connect. The industry can first provide non-savings insurance products for cross-border sales, such as medical insurance and accident insurance, and then introduce products with savings component when the operation is mature.
In fact, apart from the internationalization of Renminbi, people in the Greater Bay Area will also benefit from the Insurance Connect as they will have more choices of insurance products, in terms of number and flexibility, to meet their financial needs. In addition, the industry can keep part of the premiums received from the Mainland for investment on the Mainland, and thus there is no need to worry too much about capital outflow. The Greater Bay Area will be an important market for Hong Kong, and the insurance industry hopes to open up the Insurance Connect market as soon as possible.
Thank you, Deputy President.