The Fourth Belt and Road Summit 2019 – FinTech Cultural Revolution for Inclusive and Green Finance

The fourth Belt and Road Summit jointly organized by the Hong Kong Special Administrative Region Government and the Hong Kong Trade Development Council was held on 11 to 12 September 2019 at the Hong Kong Convention and Exhibition Centre. With around 5000 government officials, professionals, and entrepreneurs from 69 countries attending the summit, opportunities, and innovations were shared and explored.   

Collaboration in the Greater Bay Area for Belt and Road success  

In the panel discussion regarding collaboration in the Greater Bay Area (GBA) for Belt and Road success, Mr. Gao Yingxin, the Vice Chairman and Chief Executive of Bank of China (Hong Kong) mentioned that the GBA should focus on welfare, cross-border finance, green finance, and fintech.   

Photo: Panel Chair: Dr Jonathan Choi, Chairman of the Guangdong-Hong Kong-Macao Bay Area Entrepreneurs Union

Gao mentioned the importance of livelihood related finance, making sure that systems can respond well to the demand of enterprises and citizens. An important step forward that was made was that citizens in Hong Kong can now set up bank accounts in Mainland China without having to visit the GBA, and will have access to services such as insurance, and will have control of the connectivity of their money.  

Renminbi internationalization  

The US Dollar (USD) is the dominant currency in trading, investment, and reserves under the current international monetary system. China’s Renminbi (RMB) was pegged to the USD from the 1980s to the 2000s and accumulated 3.8 trillion USD worth of foreign reserves in Jan. 2014. The foreign reserves can lead to considerable losses to China if USD suffers in drastic depreciation. China once advocated the use of super-sovereign currency (special drawing right or SDR) as a global reserve currency. Currencies in major economies, including China, are the constituent currencies weighted by their GDP shares. In the long term, China wants the RMB to be pegged by its trading partners and become the major reserve currency in foreign central banks.  

The Belt and Road Initiative is a key strategy to take Chinese companies internationally and serves as an important platform for RMB’s internationalization. The Chinese government aims at strengthening the competitiveness of the RMB in the international monetary environment, which is the key driver for China’s long-term economic growth.  

RMB internationalization along the Belt and Road countries allows Chinese companies to have leverage on exchange rates, financing, debts and will be able to mark up the RMB’s status in the international monetary system. China’s bilateral RMB swap agreements reached 3.209 trillion in 2017. As of Aug 2019, RMB ranks 5th as a global payment currency with a market share of 2.22%.  

Fintech to reshape the cross-border trade along the Digital Silk Road  

Dr. George Lam, the Chairman of Cyberport, emphasized the importance of four movements, the movement of people, goods, capital, and information. Providing solutions for inclusive and green finance while helping small to medium enterprises (SMEs) and entrepreneurs are crucial elements Cyberport aims to bring to the Belt and Road Initiative.   

Photo: Panelists of the forum and representatives

Mr. Ningwa Lau, the co-founder and Executive Director of Joy Rich Ventures said that with electronic payments and settlements, Hong Kong could be the bridge between China and other countries, as the technology in China has seen a lot of growth.   

Benjamin Wong, the co-founder and Chief Executive Officer of Transwap, mentioned that the Belt and Road Initiative had brought opportunities including the free flow of capital, moving of goods and money. Cross-border trade has been made more efficient, while companies can support small to medium enterprises and support the digitization of these companies, which makes a lot of processes more seamless. Deploying AI for KYC and AML monitoring will also be more effective anti-terrorism observations.   

Gianluca Pizzituti, the co-founder and CEO of Velotrade, suggested that there is still a digital infrastructure to be built; governments should also focus on “soft infrastructure” as well as digital platforms to safely operate and underwrite risk that is safe for everyone and to be more inclusive. SMEs are currently facing a challenge of getting access to data; this may welcome opportunities from the government, databases for lenders to validate genuine transactions, as the number one issue that SMEs have, is that lenders cannot verify data.   

One country, two systems, three currencies  

Dr. Thomas S T So, member of the Law Society of Hong Kong and the past president and Chairman of the Belt and Road Committee, mentioned that the GBA involves one country, two systems, three currencies. The collaborations of the 9+2, including nine cities in the Guangdong province and the two special administrative systems, will help bring the GBA to an international level and with international standards.   

There are four important movements, the movement of people, goods, capital, and information. There are two approaches, bottom-up and top-down. At the government level, they should be responsible for synchronizing policies and making sure not to contradict the one country two systems initiative.   

At the same time, the GBA would not succeed without the people – bottom-up, therefore improving cultural exchanges between the 9+2 cities will enhance the creation of a common identity among the people of the 9+2 cities. Dr. So mentioned that education is also important for people in the 9+2 cities, for them to learn the advantages and disadvantages and the differences of the systems, that could be taken to make the initiative work.   

Belt and Road fintech opportunities for the young generation  

“A cultural revolution must take place in order for graduates to want to start to join fintech firms,” mentioned Pizzituti.  

Photo: Simon Loong, founder and CEO of Welab

Simon Loong, the founder and CEO of Welab, previously an online lending platform, having recently obtained a virtual banking license, mentioned that Hong Kong is a good testbed for new companies, especially fintech companies. He also stated that AI and in-house data analytics are being more commonly used. The belt and road initiative is an excellent opportunity to scale to other markets.