Hong Kong's de-facto central bank warned on Friday that the city must not "sit on its laurels" if it wants to remain a global financial centre after plans for China's first free trade zone were revealed.
IFC tower (C) is seen in the financial district of Hong Kong, on September 6, 2013. Hong Kong's de-facto central bank warned the city must not "sit on its laurels" if it wants to remain a global financial centre after plans for China's first free trade zone were revealed.
Draft proposals for the free trade zone (FTZ) in Shanghai, seen by AFP, showed that the zone goes beyond greater liberalisation of trade to take in investment and financial services -- including free currency convertibility.
"It is no good for Hong Kong to sit on its laurels and just hope or pray that other financial centres do not or cannot catch up," Hong Kong Monetary Authority chief executive Norman Chan told a financial summit in the city.
"There is no room for complacency," he added.
When asked by AFP if he feared Shanghai could surpass Hong Kong as a financial hub, Chan defended its powerhouse status.
"Hong Kong is already a world-class financial centre and has a leading edge in the offshore renminbi business," he said.
"It is important that we continue to upgrade our platform in facilitating renminbi businesses and we will be able to maintain a competitive edge over time."
As pro-democracy campaigners in Hong Kong push for universal suffrage by 2017 and anti-Beijing sentiment increases, Chan said the city's economy was "well positioned" to withstand political tensions.
"We have taken sufficient measures to enhance the risk management of the banking system, our banks are well positioned and well prepared to withstand future shocks, from whatever source," he said.
Chan underlined the crucial importance of financial market infrastructure to a city's economic success.
The draft free trade zone plan for Shanghai, revealed exclusively by AFP on Thursday, said the new zone would support the establishment of foreign and joint venture banks and welcome privately funded financial institutions.
At present, China's banking sector is overwhelmingly dominated by state-run institutions.
Hong Kong returned to China in 1997, when it was handed over by Britain, but maintains a semi-autonomous status with its own legal and financial systems.