26.     On the external front, globalisation and the emerging regional economies will bring increasing competition to Hong Kong. The global economic landscape has been changing rapidly in the past 20 to 30 years. The application of information technology, enhanced efficiency in transportation and logistics management, liberalisation and integration of financial markets in various economies and the rise of emerging markets all pose new challenges to Hong Kong. The Mainland economy is now at a crucial stage of change in its mode of development, with continuous restructuring and upgrading of Mainland industries. The rapid development and progress of Mainland cities will also bring more competition to Hong Kong.

27.     In a report released at the end of last year, the International Monetary Fund pointed out that further financial liberalisation in the Mainland is likely to consolidate Hong Kong's position as an international financial centre over the medium term. However, with the modernisation of the Mainland's financial system and the development of other financial centres in the Mainland, Hong Kong's comparative advantage in China-related intermediation may diminish. To maintain its long-term standing as an international financial centre, Hong Kong must build a geographically diverse base for its financial services in the region.

28.     Apart from looking at expansion in regional financial services, we must maintain and promote Hong Kong's role as an international cosmopolitan city. We will continue to expand our capacity to handle trading and financial issues and broaden our international horizon through access to more overseas markets and by establishing stronger international links. We will further ease business operations, improve the transparency of our regulatory regime, streamline procedures, encourage creative ideas and promote the use of technology. These will help economic restructuring, reduce business compliance costs and enhance our ability to meet the challenges brought by globalisation and by rapid integration with the Mainland economy.

29.     For a highly developed city, global competition is ultimately a competition for talent. To consolidate Hong Kong's position as Asia's world city, we must nurture a large number of talented local people as well as attract talent from the Mainland and around the world.

30.     The Government will continue to invest heavily in education and retraining as well as create more favourable conditions to attract talent from around the world. The completion of major infrastructure projects and various environmental improvement measures mentioned in last year's Policy Address will also allow us to expand our business opportunities, raise economic efficiency and build a quality city with a quality living environment to enhance Hong Kong's attractiveness.

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