Beijing's recent decision to develop security legislation for Hong Kong will not affect the special administrative region's status of a global financial center, the city's financial secretary, Paul Chan Mo-po, said, adding that Hong Kong's authorities were not planning on controlling the capital flow
BEIJING (Pakistan Point News / Sputnik - 01st June, 2020) Beijing's recent decision to develop security legislation for Hong Kong will not affect the special administrative region's status of a global financial center, the city's financial secretary, Paul Chan Mo-po, said, adding that Hong Kong's authorities were not planning on controlling the capital flow.
Last week, the Chinese parliament passed a resolution, under which the Standing Committee of China's National People's Congress will be in charge of developing a national security law for Hong Kong banning secessionist and subversive activity. In response to the legislation, US Secretary of State Mike Pompeo informed Congress on Wednesday that Hong Kong was no longer autonomous from mainland China. Two days later, US President Donald Trump said that Washington would begin a process to eliminate policy exemptions that provided Hong Kong with special treatment on trade, technology and other matters, which could threaten the city's trading relationship with the United States.
"The [financial] market is concerned about two aspects. Firstly, it is about the impact of the law on freedom of access to capital and the functioning of exchange rates, as well as on the future status of Hong Kong as an international financial center. I can confidently say that none of these aspects were harmed," Paul Chan wrote in his blog on Sunday, adding that the stability of public order was a key prerequisite for a good business.
The financial chief noted that Hong Kong did not apply a foreign exchange control policy and the Hong Kong Dollar was freely convertible.
"The government of Hong Kong Special Administrative Region guarantees freedom of capital flow. This is a constitutional guarantee and one of the key elements of the status of Hong Kong as an international financial center. So let me once again note that Hong Kong will not exercise foreign exchange control, the Hong Kong dollar is freely convertible, and the capital can flow freely," the official added.
As for the exchange rate mechanism, the city's financial secretary noted that it was Hong Kong's own mechanism, and it worked under the availability of a sufficient US Dollars reserve to ensure exchange in the range from 7.75 Hong Kong dollars to $7.85.
"At present, Hong Kong has enough foreign exchange reserves, assets exceed $440 billion, which guarantees the most reliable support for the Hong Kong dollar," Paul Chan said.
He added that Hong Kong had enough funds, experience and confidence to respond to emerging challenges.
