China and Hong Kong agree 'belt and road' cooperation

The arrangement, signed by the National Development and Reform Commission of China (NDRC) and Hong Kong Special Administrative Region (HK SAR), outlines a shared vision for Hong Kong's participation and assistance in China's 'belt and road' initiative.

The 'belt and road' initiative, formally known as the Silk Road Economic Belt and 21st Century Maritime Silk Road Initiatives, is a strategy China has set out to finance and deliver projects along land routes to Europe, across Asia and the Middle East, and across trade routes over the South China Sea, South Pacific Ocean and Indian Ocean. The particular focus is on energy and transport infrastructure projects.

Hong Kong-based project finance expert John Yeap of Pinsent Masons, the law firm behind Out-Law.com, said that the HK SAR government had "identified an important role that Hong Kong is uniquely placed to play in the advancement of the 'belt and road' initiative".

"The city has the expertise and experience to participate in complex infrastructure projects, expertise and experience that will be important to delivering similar projects along the 'belt and road' countries," Yeap said. "The NDRC formalisation of Hong Kong’s participation gives the city the full endorsement and support of the central government."

The arrangement between China and Hong Kong identified the "unique advantages in economy, trade, finance, and expertise" that Hong Kong has, and outlined plans to utilise the city state's status as a major business and transport hub to support companies involved in 'belt and road' projects.

According to the arrangement, China will support Hong Kong to "provide feasibility and risk assessment, R&D, financing, planning, design, construction, supervision, management and maintenance services" for 'belt and road' initiatives.

Authorities in both jurisdictions will look to provide public funding for, and promote private sector investment in, 'belt and road' initiatives, and the arrangement also envisages the use of Hong Kong's green bonds market to provide for financing too.

'Belt and road' projects will deliver opportunities for insurers and reinsurers based in Hong Kong, as well as in the sphere of "marine services", including in relation to ship financing and maritime law and dispute resolution, according to the arrangement.

Chinese and Hong Kong officials also foresee a "strategic cooperative partnership" on infrastructure between mainland China and Hong Kong, China-based companies will be encouraged to set up "regional headquarters" in Hong Kong and use the city state as a "frontier platform" for engaging on 'belt and road' projects elsewhere in the region.

China will also help Hong Kong to enter into "free trade agreements and double taxation relief arrangements" with "relevant countries and regions and economies".

The arrangement also addressed the need for skills to support 'belt and road' work. It highlighted the role universities in Hong Kong could play in collaborating with universities and colleges elsewhere in the world and attracting students to study in Hong Kong from other countries. Young people in Hong Kong should also have more opportunities to work as interns at Chinese-owned businesses operating abroad, it said.

"Both sides aim at achieving mutual benefit, win-win and coordinated development between the mainland and Hong Kong," the arrangement said.