| This paper emphatically analyzes and demonstrates advantages,disadvantages,opportunities and threats of Hong Kong International Finance Center(IFC),and thereby further discusses the evolution trend of IFC position from the following multiple dimensions: discussion on the development process and international status of IFC,the development of CNY offshore financial market and its impact on IFC,risks and challenges faced by IFC,etc.The major opinion of this paper is that the position of IFC can be transformed and upgraded by actively developing multi-level and diversified CNY offshore financial market,building Hong Kong CNY International Finance Center,and evolving Hong Kong IFC into a complex international finance center with the coexistence of US dollar and CNY from a single US dollar international finance center.The key is to promote a virtuous cycle of commodity and currency,which is reflected in resource elements in the free flow of CNY financial ecological circle and US dollar financial ecological circle,so as to give full play to the competitive advantage of Hong Kong complex international finance center with US dollar and CNY.Therefore,Hong Kong should clear and definite the development strategy of improving the quality of international financial services.The paper is divided into seven parts:Part One: Introduction.In recent years,affected by dual influences of the weakening of the US dollar status and the deterioration of international trade,IFC is also facing the choice of transformation.However,as China plays a more active role in international political and economic affairs,and CNY plays a more important role in the international monetary system,IFC gains new opportunities in transition development.In the literature review,the research on the construction of Hong Kong CNY international finance center is becoming more and more important.Besides,with the development of Hong Kong IFC,a series of problems worthy of further study are derived.The study of this paper has a certain practical significance and reference value in better understanding development condition,development pattern and development trend of the IFC in China as well as problems faced by Hong Kong international finance center due to the sustainable development,accelerating the construction of Hong Kong CNY offshore financial market,and promoting China to be a financial powerhouse more quickly and effectively.Part Two: The development course of Hong Kong international finance center.It is not difficult to find out that the establishment of the position of Hong Kong IFC is not only the result of economic development,but also the necessity of historical development by combing the historical evolution process of main pillar industries in Hong Kong in the last century.Firstly,Hong Kong has been implementing the principle of minimum market intervention for a long time.Secondly,the transformation and upgrading of the industrial structure in Hong Kong and the evolution process of the industry have laid the foundation of the real economy and the financial foundation for IFC.Thirdly,legal construction and supervision improvement have laid a solid foundation for consolidating the position of Hong Kong international finance center.For the characteristics of Hong Kong international finance center,in terms of informal institutions,the inclusiveness of Hong Kong social culture makes the characteristics of high integration of Hong Kong diversified culture obvious,which also makes Hong Kong become an international metropolis with strong inclusiveness,and then determines the high-degree extroversion of HK economy and establishes the position of HK IFC.Meanwhile,the rule of law in HK has been deeply rooted among the people.HK carries out the concept of rule of law,legal order,legal environment,and legal management in citizens and legal person's thoughts and behaviors,so that the spirit of the rule of law has become one of the core values of HK society.HK has established a modern financial system centered on the currency board system.The linked exchange rate system,while weakening the functions of the central bank,promotes the free flow of international capital in HK,speeds up the development of HK international financial market,and promotes its position of IFC.Part Three: Discussion on the position of Hong Kong International Finance Center(IFC).Currently,Hong Kong is the third international finance center in the world,only second to London and New York.However,the lack of economic and political conditions prevents Hong Kong from replacing London and New York and becoming a more powerful US dollar international finance center.Having been challenged by other international and inland finance centers,the development of Hong Kong as an US dollar international finance center has also run into the bottleneck.However,mainland China has provided the historical opportunities for Hong Kong to transform and improve the position of its international finance center.In terms of the relationship between the finance center of Shanghai and Hong Kong,there are complementary advantages as well as the trend of dislocation development.The development of these two centers is parallel.As for the relationship between the finance center of Guangdong and Hong Kong,the gradient development model in financial industry will transform into the two-wheel drive model with the deepening financial cooperation.With the continuous enhancement of financial relationship between Hong Kong and mainland China,Hong Kong will play an active role in developing CNY offshore market in CNY internationalization and consolidating its position as the CNY offshore financial center.Therefore,under the circumstances of opportunities and challenges,it is necessary for Hong Kong to bring its comparative advantages and the exclusiveness of its location advantages into full play,promote the internationalization of its industrial entities,capital market and human resources in order to further improve the position of its international finance center.It is foreseeable that Hong Kong International Finance Center will transform into a complex international finance center of the coexistence of US dollar and CNY from a single US dollar international finance center,therefore the bottleneck of the US dollar international finance center will be broken by the development of the CNY international finance center.Moreover,the positive development of the multi-level and diversified CNY offshore financial market is essential in the construction of Hong Kong International Finance Center.Part Four: the development of offshore CNY financial market of Hong Kong international financial center.With the gradual improvement of the CNY payment and settlement system in Hong Kong,Hong Kong has gradually developed a diversified offshore CNY financial business,from the initial limited personal CNY business to transactions in bonds,stocks,currency,securities,fund and the like,thus forming A multi-level offshore CNY financial market.Hong Kong's offshore CNY financial market can be broadly divided into different types of financial markets base on its characteristics in business,such as the loan market,the money market,the securities market,the foreign exchange market,the derivatives market and other financial product markets.After 2010,the cross-border CNY settlement funds and CNY overseas direct investment funds of the offshore CNY market in Hong Kong have increased significantly,forming an offshore CNY fund pool.In the construction of such a pool,Hong Kong has also accelerated the establishment of forming mechanism in both the offshore CNY interest rate and its exchange rate.Currently,the increasing pressure that international capital has placed on the formation of offshore CNY interest rates and exchange rates is quite prominent.However,large amounts of offshore CNY are used in speculative activities,like arbitrage,resulting in strong speculation and volatility of offshore CNY interest rates and exchange rate.The main reason is that copious amounts of offshore CNY are stuck in the virtual economy,which robs its sufficient support for the domestic and foreign real economy.Therefore,the next phase of offshore CNY financial market's focus should be on its support to the real economy.In summary,the development of offshore CNY financial market in Hong Kong is beneficial for the accumulation and turnover of offshore CNY funds,innovation of offshore CNY financial trading products,optimization of the allocation of offshore CNY resources,helping improve the forming mechanism of offshore CNY exchange rate,which all eventually establish the status of Hong Kong offshore CNY trading center and pricing center.Part Five: the impact of offshore CNY financial market on the status of Hong Kong as an international financial center.The full play of the positive role of the offshore CNY market in Hong Kong can fundamentally enhance its international competitiveness as an international financial center and have a far-reaching impact on Hong Kong's status in this regard.First,the offshore CNY financial market can promote its functions as international currency,international payment currency,international reserve currency and international investment currency.Second,the offshore CNY financial market can enhance the competitiveness of Hong Kong as an international financial center.For Hong Kong,an elevated competitiveness in international financial market brings about several distinct benefits.A)It facilitates the smooth financing of infrastructure projects,thereby maximizing Hong Kong's geographical advantage in natural deep-water harbor,its regional advantages as an international shipping center and the Asian dry bulk,container transport hub and its advantages in multi-modal transport by road,sea and air.B),It is conducive to the operations,financing and investment of enterprises.C)It helps to promote sustained financial innovation and financial deepening,which creates a clearer picture about the increasing trend of Hong Kong in deepening internationalization of financial industry and financial capital,thus enhancing the professionalism of human resources in financial industry.Lastly,the offshore CNY financial market can consolidate Hong Kong's position as an international financial center.The key role of the offshore CNY financial market is to promote a virtuous cycle of commodities and currency.This kind of virtuous circle not only embodies in the effective circulation of resources characterized by commodities and currency in the CNY financial ecosystem,but also in the effective concentration of resources in this circle.Meanwhile,it is illustrated by the free flow of the resources in the CNY financial ecosystem and the US dollar financial circle,demonstrating Hong Kong's advantages as a CNY and dollar composite international financial center.Therefore,the concentration and circulation of resources and its intra-and inter-regional flow are the exact role that offshore CNY financial markets should play,and the root in strengthening the position of Hong Kong as an international financial center.Part Six: the risks and challenges that Hong Kong faces as International Financial Center.First,Hong Kong has the risk of being "marginalized" in China's economic structure,which can be summarized into five main aspects: a)the lessening of the role being a trade transit center;b)the lessening of the role being capital intermediary;c)the lessening of the role being inter-industry connection d),the lessening of the role being the transport hub;e)the lessening of the role in political communication.Second,the prevalence of arbitrage and other speculative activities in Hong Kong brings about potential risk.The existence of one-way short-selling mechanism for offshore CNY has made Hong Kong become an offshore financial center for arbitrage.There exist several reasons for this situation.First,the volume of offshore CNY deposit and its weak demand make it possible for speculators to borrow it at low cost and sell it off massively in the spot and forward exchange markets,creating a strong depreciation expectation.Second,the expansion of the gap in exchange rate in the two places and the surge in speculative demand lead to the increase in interest margin in these two places,which altogether triggers rounds of hot money swarming into Hong Kong for the purpose of arbitrage.All these increase the offshore CNY stock,further becoming the chip for the speculators to short the CNY.Finally,Hong Kong faces the challenge of becoming a transnational tax evasion place.Take the Japanese offshore financial center as the example,the third stage of the Japanese yen internationalization strategy did not effectively increase the share of the yen in international trade and international finance,and failed to effectively reverse its decline in the proportion of international reserves.However,asset of Japan's offshore center on the whole witnesses a growth.The reason is that the Japanese offshore center has already become a channel for re-lending and a tool for international tax avoidance,which didn't play a positive role in internationalization of the yen,either.We should regard it as a lesson so that the construction of offshore CNY center in Hong Kong should not only prevent large-scale cross-border capital flows,but also loopholes in the financial system.Part Seven: ways to promote the status of Hong Kong as an international financial center.Through the SWOT analysis of the status of Hong Kong as an international financial center,I reiterate some of my points.First,Hong Kong does not possess the economic and political conditions to replace London and New York as a stronger dollar dominated international financial center.Second,the development bottleneck of the dollar dominated international financial center can be broken through the broad potential of the CNY in international financial center.Third,a multi-level diversified offshore CNY financial market should be developed vigorously,and a CNY international financial center in Hong Kong should be constructed so as to promote Hong Kong's development from the dollar-centered to US dollars and CNY coexistence,achieving the status as a complex international finance center.Fourth,the development of complex international financial center lies in promoting a virtuous circle of goods and currency.On this basis,the development of Hong Kong's international financial center can be divided into two key directions.One is to continue to consolidate Hong Kong's position as an international financial center in the US dollar financial ecosystem,and the other is to actively build Hong Kong as an international financial center in the CNY financial ecosystem.I believe that establishment of this position needs the confirmation of Hong Kong as the CNY commodity circulation center,the CNY financial transactions center and the CNY financial information center.The future development strategy of CNY international financial center should focus on providing following services,including services for import and export of mainland goods,overseas loan financing for mainland enterprises,overseas listing and financing for mainland enterprises,overseas issuance of bonds for mainland enterprises,direct overseas investment for mainland enterprises,direct investment for overseas enterprises,indirect investment for overseas institutions,and so on. |
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