Xu Zhengyu: Complementary advantages between Beijing and Hong Kong, broad prospects for financial cooperation.

On October 30th, Hong Kong Financial Secretary and Commissioner of Treasury Christopher Hui delivered a speech at the 2025 Financial Street Holdings Forum Annual Meeting parallel forum with the theme "Beijing-Hong Kong Cooperation for a Win-Win Future". He pointed out that the global economy is currently undergoing a crucial period of transformation and reshaping, with the financial industry serving as a bridge for the integration of technology and industry, carrying an important mission to drive innovation and enhance efficiency. Beijing, as the national financial management center, is the location of several important financial regulatory institutions and headquarters of many leading enterprises, serving as the core of policy and innovation. Meanwhile, Hong Kong, as an international financial center, ranks third globally and first in Asia in the latest Global Financial Centers Index, with unique advantages under the principle of "One Country, Two Systems" including free flow of funds, talents, information, and data, implementation of common law system, and serving as an ideal platform to connect domestic and international markets. The complementary advantages of Beijing and Hong Kong and their unlimited cooperation potential will inject new vitality into the national financial openness and the Belt and Road Initiative. Christopher Hui emphasized that the country emphasizes financial services to the real economy, accelerates the construction of a modern financial market system, and continues to promote the opening up of the financial industry. Beijing and Hong Kong have ample room for cooperation in this process. As an important intersection of national and international dual circulation, Hong Kong will fully leverage the advantages of its capital market to support Beijing enterprises in expanding overseas, promoting the development of new productive forces, and driving high-quality economic growth. Hong Kong, as a global leading fundraising center, provides an important platform for Beijing enterprises to explore international and Belt and Road markets. As of the end of last month, nearly 230 Beijing enterprises are listed in Hong Kong with a total market value of nearly HK$13 trillion, accounting for about a quarter of the market value of the Hong Kong stock market, and cumulative financing exceeding HK$3 trillion. The listing of Beijing enterprises in Hong Kong not only meets their financing needs but also promotes the development of the Hong Kong capital market, providing investors with more high-quality investment choices and creating a new phase of mutually beneficial financial cooperation between the two regions. To meet the needs of new economic enterprises, the Hong Kong Stock Exchange continues to optimize the listing system. The Specialized New Economy Companies Listing Mechanism introduced in March 2023 facilitates the listing of technology companies in new information technology, advanced hardware and software, advanced materials, and new energy sectors. Following the successful reform of listing biotechnology companies, it further provides an international capital channel for national innovative enterprises, in line with national policies supporting specialized new economy companies. At the same time, the stock inventory mechanism, optimization of IPO approval process, and reform of new stock pricing mechanism, enhance the inclusiveness and international competitiveness of the Hong Kong capital market. Hong Kong provides advanced corporate financing and wealth management services for Beijing enterprises, which is another focus beyond financing. Qualified corporate treasury centers enjoy a half-tax concession, attracting many mainland enterprises based in Beijing to establish treasury centers in Hong Kong to manage cash, financing, foreign exchange, and hedging businesses, reducing financial costs. Since the launch of the tax incentive program, the Hong Kong Monetary Authority has been in contact with about 850 companies, with over 140 companies, including more than 40 companies headquartered in Beijing, planning or already establishing treasury centers in Hong Kong. We are currently studying tax reduction optimization, with expectations to complete it in the first half of 2026. In terms of wealth management, Hong Kong can provide comprehensive services for both mainland enterprises and individual investors. As of the end of last year, Hong Kong manages assets exceeding HK$35 trillion, of which 64% are from non-Hong Kong investors. On the other hand, the mainland and Hong Kong fund mutual recognition arrangement recognizes 82 funds, with net sales exceeding RMB 110 billion as of July this year. Beijing enterprises can utilize Hong Kong's open-ended fund company, limited partnership fund, and real estate investment trust fund to finance and expand their global businesses. Hong Kong's ecosystem for family offices supports wealth management and succession, with Hong Kong promoting a series of policies to facilitate the vibrant development of family offices and asset owners in Hong Kong. In terms of risk management, Hong Kong serves as a global insurance hub, providing diversified risk management solutions for Beijing enterprises. Beijing insurance companies transacting with qualified Hong Kong professional reinsurers are entitled to preferential capital requirements. In combating natural disasters and risks of climate change, Hong Kong has introduced specialized regulatory systems and subsidy programs, facilitating the issuance of insurance-linked securities including catastrophe bonds in Hong Kong. Since 2021, Hong Kong has facilitated the issuance of seven catastrophe bonds, effectively transferring insurance risks to capital markets through securitization, with a total value of nearly US$800 million. In addition, the insurance-linked securities subsidy program pilot has been extended to 2028 to lower upfront costs and continue to promote the issuance of related securities. Hong Kong also encourages mainland enterprises to establish captive insurance companies in Hong Kong, where six out of ten mainland captive insurance companies are established, including state-owned enterprises such as CNOOC, Sinopec, and CGNPower, highlighting the attractiveness of Hong Kong as a captive insurance center. Christopher Hui concluded that the future prospects for financial cooperation between Beijing and Hong Kong are very broad and full of opportunities. Hong Kong will continue to play its role as a "super connector" and "super value enhancer," serving the needs of the country with its own strengths, assisting in the implementation of the national strategies of "going out" and "bringing in." He believes that through close cooperation, complementary advantages, and shared resources between Beijing and Hong Kong, both as the national financial management center and international financial center, will inject new momentum into the high-quality development of the financial industry in both regions.