There is no vicious competition between Shanghai and Hong Kong, nor will Hong Kong be marginalized in the future, Hong Kong Monetary Authority Chief Executive Norman Chan Tak-lam told an economic summit on Monday.

He criticized the saying that Hong Kong's prospects merely hinge on borrowed time, and that the city would lose its support from the central government as well as its position as an international finance center to other mainland cities.

Lam said he believed those people harboring such thoughts are only obsessed with the city's past and are not looking ahead.

"The momentum for the mainland's future growth comes from growing domestic demand, more innovation, higher market efficiency and internationalization among enterprises. Hong Kong needs to seize the chance and cherish its cooperation with the mainland," he said.

Chan cited the SAR's growing dependence on the logistics business as an example. Last year, the logistics sector accounted for a quarter of the local economy - up from 20 percent in 1990 and 15 percent in 1979 when the mainland first started its reform and opening up policies.

He admitted that Hong Kong's exclusively-run offshore renminbi business might face some challenges in future, brought by Shanghai's growing openness to the world and renminbi's rapid internationalization. But no direct competition will exist as the two cities serve different clients, and capital accounts are open in different levels.

"I believe the mainland will gradually reveal its asset accounts in a bidirectional procedure. It will be easier for foreign capital to enter the mainland market as well as for mainland capital to flow out. Hong Kong should benefit from the opportunity to expand its businesses such as financing, bonds issuance and financial management," Chan said.

"As long as we maintain our own competence and explore actively for more business opportunities, we can benefit from Shanghai's development," he said.

But, HSBC's Asia-Pacific chief executive Peter Wong Tung-shun, who also spoke at the summit, said Hong Kong's own advantages as the pioneer for offshore renminbi business will subside, especially after the free renminbi conversion in the city.

"Shanghai will act as another international finance center if renminbi becomes an international currency," he said. "But I believe there will be more cooperation between Shanghai and Hong Kong as our country totally welcomes two international financial hubs."

Wong pointed out that the mainland is systematically opening its financial market to the world. This includes expanding renminbi business, launching the bourse link and scrapping Hong Kong's renminbi conversion limits, all of which will boost more capital outflow to foreign markets.

"However, Guangdong and Hong Kong can work together more as well. Guangdong can be at the frontline for developing financial services, while Hong Kong stays behind for more financial products import," he said.

Another speaker at the event, Charles Li Xiaojia, chief executive of Hong Kong Exchanges and Clearing Ltd (HKEx), expressed confidence in greater future cooperation between Hong Kong and Shanghai arising from the launch of the stocks cross-trading program.

"The Stock Connect scheme will help the mainland's capital market open up in both ways to the world, and bring market products from the globe to the region. I believe there'll be more collaboration between HKEx and the mainland's future exchanges," Li said.

agnes@chinadailyhk.com

(HK Edition 12/02/2014 page8)