LEGISLATIVE COUNCIL ─ 11 June 2015 13019 OFFICIAL RECORD OF PROCEEDINGS Thursday, 11 June 2015 The Council continued to meet at half-past Two o'clock MEMBERS PRESENT: THE PRESIDENT THE HONOURABLE JASPER TSANG YOK-SING, G.B.S., J.P. THE HONOURABLE ALBERT HO CHUN-YAN THE HONOURABLE LEE CHEUK-YAN THE HONOURABLE CHAN KAM-LAM, S.B.S., J.P. THE HONOURABLE EMILY LAU WAI-HING, J.P. THE HONOURABLE TAM YIU-CHUNG, G.B.S., J.P. THE HONOURABLE ABRAHAM SHEK LAI-HIM, G.B.S., J.P. THE HONOURABLE FREDERICK FUNG KIN-KEE, S.B.S., J.P. THE HONOURABLE WONG KWOK-HING, B.B.S., M.H. THE HONOURABLE JEFFREY LAM KIN-FUNG, G.B.S., J.P. THE HONOURABLE ANDREW LEUNG KWAN-YUEN, G.B.S., J.P. THE HONOURABLE WONG TING-KWONG, S.B.S., J.P. THE HONOURABLE STARRY LEE WAI-KING, J.P. 13020 LEGISLATIVE COUNCIL ─ 11 June 2015 DR THE HONOURABLE LAM TAI-FAI, S.B.S., J.P. THE HONOURABLE CHAN HAK-KAN, J.P. THE HONOURABLE CHAN KIN-POR, B.B.S., J.P. DR THE HONOURABLE PRISCILLA LEUNG MEI-FUN, S.B.S., J.P. THE HONOURABLE CHEUNG KWOK-CHE THE HONOURABLE IP KWOK-HIM, G.B.S., J.P. THE HONOURABLE MRS REGINA IP LAU SUK-YEE, G.B.S., J.P. THE HONOURABLE PAUL TSE WAI-CHUN, J.P. THE HONOURABLE ALAN LEONG KAH-KIT, S.C. THE HONOURABLE LEUNG KWOK-HUNG THE HONOURABLE ALBERT CHAN WAI-YIP THE HONOURABLE CLAUDIA MO THE HONOURABLE JAMES TIEN PEI-CHUN, G.B.S., J.P. THE HONOURABLE NG LEUNG-SING, S.B.S., J.P. THE HONOURABLE STEVEN HO CHUN-YIN THE HONOURABLE WU CHI-WAI, M.H. THE HONOURABLE YIU SI-WING THE HONOURABLE GARY FAN KWOK-WAI THE HONOURABLE MA FUNG-KWOK, S.B.S., J.P. THE HONOURABLE CHARLES PETER MOK, J.P. LEGISLATIVE COUNCIL ─ 11 June 2015 13021 THE HONOURABLE CHAN CHI-CHUEN DR THE HONOURABLE KENNETH CHAN KA-LOK THE HONOURABLE CHAN YUEN-HAN, S.B.S., J.P. THE HONOURABLE KENNETH LEUNG THE HONOURABLE ALICE MAK MEI-KUEN, J.P. DR THE HONOURABLE KWOK KA-KI THE HONOURABLE DENNIS KWOK THE HONOURABLE CHRISTOPHER CHEUNG WAH-FUNG, S.B.S., J.P. THE HONOURABLE SIN CHUNG-KAI, S.B.S., J.P. DR THE HONOURABLE HELENA WONG PIK-WAN THE HONOURABLE IP KIN-YUEN DR THE HONOURABLE ELIZABETH QUAT, J.P. THE HONOURABLE MARTIN LIAO CHEUNG-KONG, S.B.S., J.P. THE HONOURABLE POON SIU-PING, B.B.S., M.H. THE HONOURABLE TANG KA-PIU, J.P. DR THE HONOURABLE CHIANG LAI-WAN, J.P. IR DR THE HONOURABLE LO WAI-KWOK, B.B.S., M.H., J.P. THE HONOURABLE CHUNG KWOK-PAN THE HONOURABLE CHRISTOPHER CHUNG SHU-KUN, B.B.S., M.H., J.P. THE HONOURABLE TONY TSE WAI-CHUEN, B.B.S. 13022 LEGISLATIVE COUNCIL ─ 11 June 2015 MEMBERS ABSENT: THE HONOURABLE JAMES TO KUN-SUN THE HONOURABLE LEUNG YIU-CHUNG DR THE HONOURABLE LAU WONG-FAT, G.B.M., G.B.S., J.P. THE HONOURABLE TOMMY CHEUNG YU-YAN, S.B.S., J.P. THE HONOURABLE VINCENT FANG KANG, S.B.S., J.P. PROF THE HONOURABLE JOSEPH LEE KOK-LONG, S.B.S., J.P., Ph.D., R.N. THE HONOURABLE RONNY TONG KA-WAH, S.C. THE HONOURABLE CYD HO SAU-LAN, J.P. DR THE HONOURABLE LEUNG KA-LAU THE HONOURABLE WONG KWOK-KIN, S.B.S. THE HONOURABLE WONG YUK-MAN THE HONOURABLE MICHAEL TIEN PUK-SUN, B.B.S., J.P. THE HONOURABLE FRANKIE YICK CHI-MING THE HONOURABLE CHAN HAN-PAN, J.P. THE HONOURABLE LEUNG CHE-CHEUNG, B.B.S., M.H., J.P. THE HONOURABLE KWOK WAI-KEUNG DR THE HONOURABLE FERNANDO CHEUNG CHIU-HUNG LEGISLATIVE COUNCIL ─ 11 June 2015 13023 PUBLIC OFFICER ATTENDING: PROF THE HONOURABLE K C CHAN, G.B.S., J.P. SECRETARY FOR FINANCIAL SERVICES AND THE TREASURY CLERK IN ATTENDANCE: MISS ODELIA LEUNG HING-YEE, ASSISTANT SECRETARY GENERAL 13024 LEGISLATIVE COUNCIL ─ 11 June 2015 MEMBERS' MOTIONS PRESIDENT (in Cantonese): The Council now continues with the motion debate on "New challenges faced by Hong Kong as an international financial centre". NEW CHALLENGES FACED BY HONG KONG AS AN INTERNATIONAL FINANCIAL CENTRE Continuation of debate on motion which was moved on 10 June 2015 MR PAUL TSE (in Cantonese): President, if we are to discuss this subject, I think it is best to start with the crises Hong Kong faces now. We always say that we have four pillar industries, but I am afraid these pillars are weakening. We will panic if we see the recent tourist statistics, not to mention the fact that Mainland cities have already lowered their sales tax and tax on luxury goods. I believe the impact on us in this regard will be further exacerbated and that the crisis of the "New SARS" will hit us anytime. As far as the logistics industry is concerned, the leading place of our logistics industry has long been replaced by others. The industry ranked first in the world from 1992 to 2004, but dropped to the second and third place around 2005 to 2007. As of 2015, it has dropped further to the fifth place, falling behind Shanghai, Shenzhen, Singapore and Ningbo. As for the financial industry, we have learnt from Mr NG Leung-sing yesterday that Hong Kong is now facing eight major challenges. More importantly, he has also mentioned that the industry, which accounted for 20.1% of our gross domestic product (GDP) in 2007, now only accounts for 16.5% of the GDP. As for other professional services industries, they will drop with the logistics and finance industries and even other trades at any time, depending on the overall economic conditions. Hence, we must expeditiously tackle the problems faced by the four pillar industries which are now stuck in quicksand, not to say the challenges posed by other cities in China, especially Shanghai and Shenzhen. As regards Shanghai, let us compare its equity transaction with Hong Kong, both in terms of volume and price-to-earning ratio (PE). We have a daily transaction of about $200 billion, while Shanghai has a daily transaction of LEGISLATIVE COUNCIL ─ 11 June 2015 13025 $2,000 billion, which is 10 times of ours. Hong Kong's average PE is 10 to 12, that of Shanghai is 22 to 24, while Shenzhen's PE is even more impressive, standing at 60 to 67. As such, the leading position of Hong Kong is under threat. What is more important is that the five countries collectively known as "BRICS" are going to establish a new bank with an investment volume of US$100 billion, and we all know that the bank's headquarter will be located in Shanghai. Over the past two days we might have noticed information about whether China A-shares seeking to be included in the Morgan Stanley Capital International (MSCI) Index. Much to our relief, the ultimate decision is that China A-shares will not be included in the Index for the moment. The reasons for the setback, which China will have to overcome, include its capital liquidity, quota and beneficial ownership. Hong Kong has dodged this calamity for now, but sooner or later we will have to face it. Once China A-shares are successfully included in the MSCI Index, just like the way they were included in the Financial Times Stock Exchange Index of the Royal London Global Index last month, Hong Kong will have to face yet another challenge. This is the crisis we have to face. I wish to talk a little more on our State policy. Both the "One Belt One Road" initiative and the Asian Infrastructure Investment Bank (AIIB) seem to be some economic policies on the surface, but they in fact involve serious consideration of the State policy. The United States debuted its policy of "returning to Asia" in 2005, but the policy was in fact led by Mr LI Kuan-yew. In addition, Henry KISSINGER and some Harvard academia have also put forth the ideas of "the emergence of a big nation" and the "ultimate war". Even the visit paid by AUNG SAN Suu Kyi to China in the past two days is no mere coincidence. In a way, this is a kind of interaction among nations. The State policy is being challenged by the United States strategy of "returning to Asia". On the economic front, we more or less understand that we are resisting the economic hegemony forged by the United States and Japan. We certainly wish to join force with Asian, European and African countries to counteract the United States-Japan hegemony, which exists in the realms of currency, finance and trade. Everyone knows that the World Trade Organization and the International Monetary Fund are manipulated by the United States, while the Asian Development Bank is established by Japan. They pose a serious threat to China's economy as well as that of Europe, Asia and Africa. 13026 LEGISLATIVE COUNCIL ─ 11 June 2015 As a matter of fact, we need to find a way out for the investment money of the Mainland or even the entire nation. There are a few reasons behind such a need. First, our nation used to lend all the money to the United States in the past, involving a loan amount of US$3,300 billion. If the loaned money should depreciate, our nation would incur serious losses. Second, in view of the problem of excessive production capacity, which is apparently very serious, we need to find a way out for our capital, capacity, talents and skills.