Pact unlocks new avenues for trade, data flow

Cheng Wong and Bloomberg

The Hainan-Hong Kong memorandum of cooperation encompasses deep collaboration in five areas such as data flow, reflecting the superimposed advantages of the two regions, said Chief Executive John Lee Ka-chiu.

Speaking at the signing ceremony on the second day of his trip to Hainan for Boao Forum for Asia, Lee said the cooperation will also cover fields in economic and trade investment, finance, tourism and talent exchange.

"We warmly welcome Hainan to expand the recognition of Hong Kong professionals in the region, providing more development opportunities for Hong Kong's professional services sector," he said. "This will complement the internationalization of Hainan's professional services and work together to support the robust development of Hainan's free trade port."

Lee said Hong Kong has long been the primary source of foreign investment in Hainan, with many Hong Kong companies operating there.

Hainan is the first provincial government in the mainland to use Hong Kong's financing platform and professional services for bond issuance.

Lee said Hainan has issued offshore RMB bonds in Hong Kong for three consecutive years, totaling 13.1 billion yuan (HK$14.03 billion).

Noting that this year marks the island-wide customs closure of Hainan's Free Trade Port and its expansion, Lee said Hong Kong has consistently supported free trade and multilateralism, adding that the city government will fully leverage the unique advantages of one country, two systems to attract international projects to Hainan and facilitate overseas investment.

At the forum, Huang Yiping, a member of the Chinese central bank's monetary policy committee, said the mainland economy got off to a good start this year and authorities are ready to deploy more stimulus if growth loses momentum.

He said a stimulus package announced in September has stabilized the economy and allows policymakers to focus on structural reforms.

Boosting business and consumer confidence is now key, he added.

"The government has made it very clear that if there's a need, both fiscal policy and monetary policy can step up. Basically, it will be data-driven," Huang said. He called the economy's performance so far this year "reasonably good."

His view reflects cautious optimism about the trajectory of the world's second-largest economy as rising trade friction threatens to hurt export, which contributed to almost a third of growth last year.

It also offers an explanation for authorities' decision to hold back on major monetary easing measures this year despite top leaders' pledge in December to adopt a "moderately loose" monetary policy for the first time since 2010.