Keynote Speech by John C Tsang, the Financial Secretary of HKSAR Government at the Global Business Forum 2015

Following is the speech by the Financial Secretary, Mr John C Tsang, at the Global Business Forum 2015 hosted by The Chinese University of Hong Kong (CUHK) Business School on 1 March, 2015 morning:

Professor Chan, Professor (Joseph) Sung, distinguished guests, fellow students, ladies and gentlemen,

Good morning.

I would like, first of all, to thank the students of the Global Business Programmes for organising this second Global Business Forum, and for inviting me to speak on this year’s theme: “Innovation in Turbulent Times.” I am happy to say that my daughter is also a product of The Chinese University of Hong Kong Business School.

Presumably, I have been invited here today to tell you all about how innovation can thrive or be employed in a constructive manner in turbulent times. I shall do the best I can, but you must, however, realise that I am well known for my inclination towards conservatism, and by deduction, you can assume that my strong suit is not directly connected with the former. But I am familiar with the latter, having experienced those unpleasant occurrences on numerous occasions in the past. Anyway, I am happy to be here.

What we have been facing in the past few years are, indeed, turbulent times. Turbulent for countries and their economies, turbulent for traditional cultures and long-standing institutions, turbulent for everything large, small and those in-between. From bonds, properties and oil to cocoa, print media and universities, just to name a few beleaguered subjects, they are all facing turbulence in one way or another.

But, then, when have there been times when things were not “a-changin’,” to take a phrase from the classic Bob Dylan song, “The times they are a-changin'”, an anthem of change, if ever there was one.

So I would suggest to you that turbulence is not something from which we should shirk, because it is the kind of recurring phenomenon that cannot be avoided, and because it may just be another word for opportunity. At least, for those of us who are eager to seize the time, or more precisely, for those of us who are prepared to seize the time.

Allow me to seize this very moment, and give you a basic primer on where we are, where we expect to get to, in this New Year of the Goat, the Ram or the Sheep, depending on your animal leanings.

To be sure, 2015 will be another challenging year for the global economy, one likely to be characterised by uneven, anemic growth, as well as, uncertainty, volatility and turbulence.

While the outlook of the US economy is somewhat more comforting, it has yet to generate strong demand for our exports. As for Europe and Japan, deflationary risks will add headwinds to their long-overdue economic recovery. The Mainland’s economic growth is relatively stable but faces downward pressure as well this year.

The global economy as a whole is likely to remain on a slow-growth path in the post-financial tsunami period that began in 2008. This, along with a stronger US dollar, will continue to put a drag on Hong Kong’s trade performance. And it is important for us to note that our total trade is equivalent to four times our GDP.

The US Federal Reserve is preparing to normalise interest rates, which runs counter to the further easing measures of Europe and Japan. The rise in US interest rates is certain. The question mark rests with the exact timing of implementation and the speed of the increase. This will have great significance for us because the Hong Kong Dollar is linked to the US Dollar. More importantly, the rise in interest rates will have a huge impact on the asset market, particularly our real estate sector.

Europe and Japan, on the other hand, are facing the calamity of a deflationary cycle, something that they are not well equipped to deal with. The great economic powers going in opposite directions will further complicate the global picture.

Moreover, the stance of the new Greek government on austerity measures and loan repayments, as well as heightened geopolitical tensions, terrorist attacks and counteractions in various corners of the world, have added further uncertainty to the world market.

The drop in international oil prices helps reduce production costs and stimulate consumption. It should benefit Hong Kong and other net energy importers. But, excessive oil price volatility will pose threats to the economy of oil exporting countries that are overly dependent on oil income. It will undermine the stability of the global financial markets.

Locally, prolonged political bickering has been widening and deepening the divide in our community. And disputes in the political arena are beginning to hurt our economic well being. This is something of huge concern to me.

It is against this turbulent backdrop that I prepared my eighth Budget, which I delivered on Wednesday past. Apart from introducing expansionary fiscal measures to stimulate domestic consumption, stabilise our economy and preserve employment, I also outlined in the Budget my thoughts on the development of our economy.

My mission as Financial Secretary is chiefly to maintain a favourable business environment, promote sustainable economic development, make available diverse and quality jobs for our working population, thereby enabling Hong Kong people to lead better and more fulfilling lives.

The future economic success of Hong Kong depends on the innovative and creative powers of individual Hong Kong people today. If we can help enable more Hong Kong people, especially our young people, to follow their dreams and to do their best, the self-motivated drive would unleash their innovative and creative powers, elevating and diversifying our economy as a result.

You must all be thinking at this stage of life about your future careers and the dreams that you will follow. No doubt, some of you may even be considering your own start-ups. Hong Kong, long a cradle for entrepreneurs, and we do have many legendary tales to tell on this score, certainly encourages business innovation. More than welcoming, and encouraging, start-ups, we actually need them. We also need you, your creative thinking and your drive.

If you should have any such inkling, push forward and make the best of your effort. My only advice is this: no matter what you intend to do, be well prepared. Be prepared to commit your whole self. Be prepared for the unexpected. And most of all, be prepared for failure.

Having a successful business and doing what you love is not going to be an easy endeavour, but the mere process of moving forward and struggling towards your own little utopia will be rewarding and satisfying. But the ultimate condition for success is that you must be well prepared.

Running one’s own business is not, of course, the only option. How about working with or actually setting up a social enterprise, which balances economic and social values? Which makes profits while helping others? Which are socially meaningful?

I am not saying that setting up a social enterprise is an easier option as compared with a commercial startup, but I do believe that a successful social enterprise has added values. It can be a disruptive innovator that squeezes the market of traditional enterprises. And a strong social enterprise sector, which accepts a lower rate of shareholder return and a higher rate of social responsibility, can be a partial solution to the wealth concentration problem in Hong Kong.

Diverse and dynamic, Hong Kong also boasts a melting pot of cultures with a blooming talent pool in the cultural and creative sectors. We wish to create an atmosphere that inspires creativity, in which our fashion designers, film directors, artists, musicians, and performers can turn their creativity into personal fulfilment as well as economic vitality.

My Budget this year highlights some of the government initiatives in these areas that I have just mentioned. I hope with persistent efforts along this direction, we can enable our young people, including many of you here this morning, to fully actualise yourselves, in the Maslow fashion, and at the same time, diversify our economy.

Some of you may have heard of Lewis Lapham. For nearly 30 years, he was the editor of Harper’s, one of the most respected publications in the US. More recently, he founded The Lapham Quarterly. I like what Mr Lapham had to say to a student audience at St. John’s College, in Annapolis, Maryland. These words were spoken a decade ago but they are no less meaningful and no less moving today.

Quote. “When I was your age,” Lapham told his young audience, “I made the mistake of imagining the future as a destination – like Paris or Baltimore or the Gobi Desert… Instead,” he said, “the future turns out to be something that you make instead of find. It isn’t waiting for your arrival, either with an arrest warrant or a band, nor is it any further away than the next sentence, the next best guess… The future is an empty canvas or a blank sheet of paper, and if you have the courage of your own thought and your own observation, you can make of it what you will.” Unquote.

I shall be looking forward to “what you will” make of your future. So, too, will Hong Kong. The shape that your decision will take will certainly mould the ultimate destiny of Hong Kong.

Finally, if you don’t mind, allow me to end my speech by quoting myself, and I hope this is not too immodest. I would like to repeat the last three paragraphs of Concluding Remarks of my Budget, which was delivered in Cantonese last Wednesday; and the following is a broadly translated version that I have done myself in English.

Quote. “Abraham Maslow once said, and I quote: “For our chronically and extremely hungry man, Utopia can be defined very simply as a place where there is plenty of food. …Freedom, love, …respect, …may all be waved aside as fripperies which are useless since they fail to fill the stomach.” Unquote.

Having developed for more than a century, Hong Kong ranks in the top tier globally for its economic success. However, behind and beyond material fulfilment, the people of this city, our younger generations in particular, are hungering for spiritual contentment. This is what a mature society should manifest, and this is a change that needs to be addressed and dealt with. Nonetheless, conflicts should be resolved through conversation rather than confrontation, and this is the point that we all must come to terms with.

As the saying goes, “Walnuts and pears you plant for your heirs.” The Hong Kong we see today is the result of the exertion of past generations who brought forth good fruit for us to try and thrive on. As for the future, much of the onus will rest with our younger generations today who will not just enjoy the good fruit but will work hard for tomorrow’s harvest. I hope that they will continue to sow the seeds, plough the land and plant the trees so their future generations can enjoy the fruits of their labour. Our vision is to make this city a better place with a brighter future for everyone where our legend lives on.” Unquote.

And I wish to add today that, if for any reason, the younger generations should forget to continue to sow the seeds, plough the land and plant the trees, their future generations will risk becoming hungry, and perhaps angry, men and women who will plague this barren land of ours.

Thank you once again for this opportunity. Have a great day.

This speech was first published in the HKSAR Government website on 1 March 2015. Please click here to read the full script.