Shanghai free trade zone will deal a blow to Hong Kong: Li

PHOTO: Shanghai free trade zone will deal a blow to Hong Kong: Li

HONG KONG - Asia's richest man Li Ka-shing warned that Shanghai's new free trade zone will have a "big impact" on Hong Kong, urging the city to up its game to avoid losing out, his office said Wednesday.

China will allow unfettered exchange of its yuan currency in its first free trade zone, according to draft plans revealed exclusively by AFP earlier September, in a bold push to reform the world's second largest economy.

The proposals showed the new Shanghai FTZ as an international trade and financial centre, which analysts say would challenge the free economy of Hong Kong.

"It (the FTZ) will have a big impact on Hong Kong," Li said, in a summary of remarks issued by his office to AFP Wednesday.

"The free convertibility of the yuan will be favourable in the development of Shanghai," he said.

"If Hong Kong does not catch up, it will lag behind others," Li added, saying that Hong Kong's GDP is already lower than that of neighbouring city-state Singapore.

When asked if Shanghai could catch up with Hong Kong within five to ten years, he said: "I do not want to predict. But it will be faster than most people expect."

Li, 85, also warned that the pro-democracy movement Occupy Central could harm the economy.

"It will have a negative impact on the economy and will affect Hong Kong's image as an international finance centre," he said.

After starting out in business as a plastic flower-maker, Li now commands a vast empire through Cheung Kong Holdings and Hutchison Whampoa, with global assets in property, telecoms, utilities, ports and retail.

He has a net worth of around $31 billion, according to Forbes magazine.

Reports that he is selling his Hong Kong-based supermarket chain ParknShop, have triggered fears he was going to pull his businesses out of the city. But he has pledged not to leave Hong Kong.

"I love Hong Kong, I love the country. Cheung Kong and Hutchison Whampoa won't be moved away from Hong Kong," he said.

Li initially made the comments at a press lunch on Tuesday.

The draft free trade zone plan for Shanghai showed 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.