Thursday, 14 January 2016

Dragging HK to "Belt and Road"

One Belt, One Road is Xi Jinping's plan to create trade links with 65 countries
Yesterday Hong Kong Chief Executive Leung Chun-ying delivered his last policy address and a good chunk of the two-hour speech was devoted to the "One Belt, One Road" trade strategy that was initiated by Chinese President Xi Jinping.

Leung, who has abbreviated it to "Belt and Road", mentioned these two words an unprecedented 48 times. It was much more than "education" (31), "innovation" (30), "sustainable" (12) and "recycling" (0).

What is this "Belt and Road" you ask?

Xi presented this initiative in 2013 and was highlighted in the 13th five-year plan last year. The proposal is to develop two trade routes -- the New Silk Road linking China with Europe, and the Maritime Silk Road linking China with Southeast Asia, Africa and Europe.

Leung wants Hong Kong to take join One Belt, One Road
As a result it will span 65 countries, including Kazakhstan, Uzbekistan, Russia, Thailand, Malaysia and Indonesia.

With links so expansive, Leung thinks Hong Kong should get in on the game. Or rather because he hopes to be re-elected next year, he wants to be in Xi's good books.

As a result, Leung is establishing a "Belt and Road" office with a committee of which he will be chairman in order to determine strategies on how Hong Kong can take advantage of these new trade links.

He has allocated HK$200 million for the professional service sector to build ties and cooperation with One Belt, One Road countries, and there will be tax incentives for those companies that set up treasury units in Hong Kong.

Not only are Leung's plans business-oriented, but education-related too. He wants students from these countries to come to Hong Kong to study, while educating local students about One Belt, One Road through study and cultural exchanges.

Is this the best Leung and his team can think of in terms of taking advantage of the One Belt, One Road strategy?

There are already stories from entrepreneurs trying to break into central Asia and having a lot of trouble doing business there.

Tom Lee, a product engineer for an electronics company, travelled to Kazakhstan in 2014 in a trip organized by the Trade Development Council. He was hoping to explore opportunities there and reached a US$30,000 deal with a local company, only to find it failed to pay up.

"Its business model is hard for Hong Kong companies to understand, and the customs system is extremely complicated," he said. Language is also a barrier. As a result Lee said his company was more focused on traditional markets like Europe and North America.

So how will Leung be able to help companies overcome these hurdles? And the committee is going to spend how many months and how much money to figure this out?

And educationally, what can students get out of this strategy? What is there for them in central Asia and Southeast Asia? Does Leung mean universities here will start providing courses on learning these languages or will there be lessons on Islam?

One parent commented, "I don't understand why the government is so generous to others but not willing to change the quality of our own education."

Point taken.

In the end it all sounds really vague, and one wonders how much he can really achieve on this initiative in one year.

Even more ironic is that people in Hong Kong aren't enthusiastic about this project, and yet Leung insists on dragging us into this plan.

While it makes sense for Hong Kong to try to find some way to benefit from these potentially big trade links, who's got an appetite for some adventure?

As Hong Kong goes through rocky economic times, most people are too scared of risking too much and would rather be close to home and bet on a sure thing.

Leung just might be biting off much more than he can chew.

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