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Financial Secretary

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Safeguarding Hong Kong’s stability and prosperity

I have given a remark on the legislation of Hong Kong National Security Law on a forum of "One Country, Two Systems" and Basic Law.

A stable environment and good law and order are the prerequisites of a thriving economy and a prosperous society. Under the unique arrangement of “One Country, Two Systems”, the Hong Kong SAR, while being an integral part of China, enjoys the flexibility to operate under a different set of system. The legislation of the Hong Kong National Security Law (the Law) can safeguard the national security and the law and order of Hong Kong, so as to provide a safe and stable ambient to facilitate Hong Kong’s continuous development.

Since the enactment of the Law, Hong Kong’s financial market continues to operate smoothly as usual. The Hong Kong dollar exchange rate has remained stable and stayed near the strong side convertibility undertaking. There has not been any noticeable sign of fund outflow from the banking system. In contrast, we have seen an inflow of over US$ 11 billion into Hong Kong dollar since June, and bank deposits have continued to increase over the past months. Stock markets stay vibrant and orderly, with a continuous flow of IPO activities attracting strong market interest.

Recently, we have been reaching out to a broad range of financial institutions in different sectors. Their general feedback is that the Law will help resuming a safe and orderly business environment, which is of utmost importance for Hong Kong’s continued development as an international financial centre. Given the importance of the Law and the concerns raised by some financial institutions over its application, I would like to highlight the following key points.

First of all, the Law is intended to target only the four specified types of acts and activities with an intent to seriously endanger national security. They will not affect the operation of the financial market, lawabiding financial institutions and market participants. The Law is not intended to affect the way they conduct business, engage in market activities or allocate their capital. The way in which they handle their proprietary data, access or transmit information, conduct commercial analysis or express opinion will neither be affected. It will not affect the normal exchange activities between individuals and organisations with their foreign counterparts. In other words, it would be business as usual for financial institutions operating within Hong Kong’s existing legal framework.

As a free and pluralistic society, Hong Kong’s success as an international financial centre thrives on the rule of law, free flow of information and capital, and freedom of speech and expression, etc. These fundamental values are upheld under the Law to ensure the continuous prosperity and stability of Hong Kong. Let me underline a few assurances reiterated by the Central Government and the Hong Kong SAR Government:

  • The Law will not affect the legitimate rights and freedom enjoyed by Hong Kong people under the Basic Law as well as the relevant provisions of international covenants as applied to Hong Kong;
  • The Law will not affect Hong Kong’s judicial independence and the principles of the rule of law;
  • The Law sets out to preserve “One Country, Two systems”. Hong Kong’s existing high degree of autonomy, legal system and capitalist system will remain intact, and the legitimate interests of foreign investors will continue to be protected; and
  • The Law will not change Hong Kong’s monetary and financial system. The Linked Exchange Rate System will remain and free flow of capital is guaranteed under the Basic Law.

Last Friday, I wrote to the Hong Kong Monetary Authority, the Securities and Futures Commission, the Insurance Authority and the Mandatory Provident Fund Schemes Authority to reaffirm these points, and asked them to brief their respective stakeholders and address their concerns.

With the support of our Country, the Hong Kong SAR Government has the determination and capability to safeguard Hong Kong’s continuous prosperity and stability. We will continue to build a world-class business environment and regulatory framework to maintain investors’ confidence in operating in Hong Kong. With the concerted efforts from all parties, I believe time will prove that the national security, prosperity and stability, as well market vitality can be all well achieved in Hong Kong, laying a more solid foundation and creating more development opportunities for enterprises here. The continuous implementation of the unprecedented “One Country, Two Systems” arrangement in Hong Kong will provide us with flexibility and institutional strengths to grasp the enormous opportunities brought by the Guangdong-Hong Kong-Macao Great Bay Area development as well as the continuous reforming and opening up of the Mainland.

Over the past few years, Hong Kong has been on the track of stable development by seizing opportunities around us. Yet our pace of development has been hindered by the violent acts happened in the latter half of last year. The enactment of the Law has shown obvious effect in restoring social stability, and it is understandable that it may take some time for the market to adapt to it. For the so-called sanction measures invoked by the US recently, although they may have raised some doubts in the market, their substantial impact on Hong Kong’s economy is limited. Nonetheless, the move of the US seriously violates international law and the basic norms underpinning international relations. It has clearly demonstrated its double standards and hegemony by opposing other countries’ move to protect their legitimate security and interests, while advocating the importance of national security in their own country. To this, we have to express our strong objection.

July 19, 2020

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