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The Role of Hong Kong in China’s Investment in the ASEAN Market

                After years of rapid economic growth, China’s economy accumulated vast amounts of capital. Against this backdrop, Chinese enterprises face a rising need for opening new markets, raising earnings and performing asset allocation for risks diversification. These factors spurred a steep increase in the demand for outbound investment from China. During the process of Mainland enterprises’ investing in the global market, Hong Kong has been playing an important middleperson role. Through a free and sound business environment, a well-established legal system and a highly effective financial market, Hong Kong serves as an ideal springboard for Mainland enterprises to expand their businesses overseas.

                Amid the international cooperation under The Belt and Road Framework, the ten member states of ASEAN have considerable advantages in terms of their strategic location, low operating costs, and tremendous market size. And the ASEAN economy has continued to progress towards economic liberalization. With the establishment of China-ASEAN free trade zone, these advantages and economic policies have propelled a surge of Chinese outbound investment to the ASEAN market. At present, Hong Kong is an international financial and business hub in the region. The free trade agreement between Hong Kong and ASEAN is expected to be signed by the end of 2017, which will raise the competitiveness of Hong Kong companies in the ASEAN market. Hong Kong is well positioned to serve as the offshore regional base for Chinese enterprises in expanding and managing their businesses in the ASEAN market.

 

Hong Kong has always been the top destination for Chinese ODI

                According to the “Report on Development of China’s Outward Investment and Economic Cooperation 2016”, Hong Kong remained the major destination for China’s outbound direct investment (ODI). Counting by flows and positions, Hong Kong’s relative weightings in China’s overall ODI topped at 60% for both figures. Over the past 10 years, Hong Kong’s share in China’s overall ODI has remained high, reflecting the importance of Hong Kong in assisting Chinese enterprises to “go global”.

                Hong Kong is a highly efficient international metropolis with a high level of development in commerce and industry. Hong Kong’s economy has a prevailing competitive edge in various aspects, including a low and simple tax regime, free and open trade policies, a just and equitable legal system, a well-developed financial market and advanced infrastructure facilities. These strengths allow Hong Kong to provide quality business services and assistance for Chinese enterprises in their global expansion. Moreover, Hong Kong companies have accumulated rich experiences in the international business market, trained up a pool of talented people with international perspectives and understood the management of international business operations. Hence, Hong Kong companies could leverage these capabilities to help Mainland enterprises in coordinating their overseas operations as well as enhancing their internationalization.

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Content provided by Bank of China (Hong Kong)
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