The Asian Financial Forum (AFF) is an event with important influence in Asia jointly sponsored by the Hong Kong SAR Government and the Hong Kong Trade Development Council every year. It has been successfully held for 15 times so far, providing a platform for global government, financial and business leaders to exchange ideas and connect investment. On the morning of January 11, 2023, the 16th Asian Financial Forum opened at the Hong Kong International Convention and Exhibition Center. The theme of the 16th Asian Financial Forum was "Promoting transformation: efficiency, co-financing and innovation". Nearly 100 heavyweight political and business leaders, financial experts, investment authorities, business leaders, technology giants and economists were invited to participate in the forum Digital currency and other hot topics will be shared to discuss how to formulate an influential business development strategy and plan a sustainable growth blueprint in the new year 2023, and how global enterprises can work together to build a resilient economic and social bureau through the concept of integration innovation and integration.

(Wu Gaolin, Chairman of the Board of Directors of the Hong Kong Intellectual Property Exchange, delivered a speech)

On January 11, the Hong Kong Intellectual Property Exchange was invited to attend the "Asian Financial Forum Sub-Conference and Shenzhen-Hong Kong Scientific and Technological Innovation Financial Cooperation and Exchange Conference". Wu Gaolin, Chairman of the Board of Directors, delivered a speech on "New Opportunities for Hong Kong's Financial Development", focusing on Shenzhen-Hong Kong Scientific and Technological Innovation Financial Cooperation and Exchange. The following is the full text of President Wu Gaolin's speech:

Dear friends and guests, I am honored to be invited by President Xiao Geng and President Xiang to participate in today's Asian Financial Forum. In my early years, I was engaged in diplomatic work in Beijing. In the 1990s, I went to Chicago and participated in the preparation of the world's first intellectual property exchange. In 2012, I came to Hong Kong and established the Hong Kong Intellectual Property Exchange. Its purpose is to provide an efficient and standardized financial trading platform for the development of the global digital economy and the realization of intellectual property rights, and serve the global digital economy and intellectual property trade, Actively explore the realization mode of new monetization of intellectual property, solve the problems of intellectual property assets transaction and circulation of enterprises, widely introduce international leading technologies to help enterprises develop, and enable the development of real economy and innovation.

In the past few decades, the global trade pattern has undergone tremendous changes. International trade has gradually transitioned from goods trade to service trade, and now from service trade to intellectual property trade. In 2021, the total volume of global trade in goods reached US $28.5 trillion, while the total volume of intellectual property trade also reached US $1 trillion. China is the fifth largest economy in global intellectual property trade. Let me mention in particular that Hong Kong has always served as a bridge in China's foreign trade. The bilateral trade between the mainland-Hong Kong/Hong Kong-Mainland has been as high as US $1 trillion a year since 2012. In the past five or six decades of trade in goods, Hong Kong has gained huge economic benefits from the re-export trade with China. Hong Kong, as a bridge of China's external relations, can not ignore the major trend in international trade and economic development - intellectual property trade. Hong Kong should make efforts to prepare for the arrival of this huge development trend. Intellectual property trade will certainly bring great prosperity to Hong Kong's economy like trade in goods, and play a vital role in consolidating Hong Kong's financial position in the world.

Since 1975, the S&P 500 has conducted a follow-up survey on the value of the company, i.e. the composition of fixed assets and intangible assets, for 50 consecutive years (see Figure 1). In 1975, 83% of the enterprise value was composed of fixed assets, while intangible assets accounted for only 17%. The top five enterprises in this period were asset-heavy companies, such as IBM, ExxonMobil, Procter&Gamble, General Electric and 3M. The rapid development of the computer industry and the Internet in the 1990s has led to an increasing proportion of intangible assets in the company's value. Since 1995, the composition of the company's value has changed tremendously - intangible assets account for 67% of the enterprise's value, while fixed assets only account for 33% of the enterprise's value. By 2020, the intangible assets of the company will reach 90% of the enterprise value, while the fixed assets will fall to only 10% of the enterprise value. This is really a huge leap and change, which has witnessed that the intangible in Laozi's Tao Te Ching is better than the tangible. In 2020, the top five enterprises have all become asset-light technology companies, such as Apple, Google, Microsoft, Amazon, Facebook, etc. 90% of the value of these companies is composed of intangible assets (see Figure 2). The same is true for Chinese enterprises, such as Meituan, Pinduoduo, Ari and Tencent, which are not asset-light enterprises. These enterprises have gained unprecedented growth space through proprietary technology or a new business model. These are the growth brought by innovation and creativity to enterprises. It is no longer necessary to rely on huge investment in fixed assets to achieve enterprise growth as in the era of industrial manufacturing.

Figure 1 Changes in intangible and tangible assets of S&P 500 enterprises under the new economic system

At the beginning of November last year, the Hong Kong government announced the declaration of digital economy, which is a great inspiration to the entire IT industry and intellectual property industry. However, there is a difference between virtual assets and virtual currencies, because virtual currencies have huge unpredictability. Their total market value reached as high as US $2.5 trillion in April 2021. After a month, they fell to only US $1.4 trillion. In April 2021, the daily trading volume of digital currency reached a maximum of US $600 billion. On June 27, 2021, the daily trading volume fell to only US $150 billion. Recent major digital currency exchanges, such as FTX Thunderstorm, can see that the digital currency fluctuates too much, rises and falls sharply, and the risk is very huge.

The scale of S&P 500's intangible assets is as high as 21 trillion US dollars, which actually points out a clear direction for our future trading market. How to realize the intangible assets of enterprises? This has caused several problems, one is digital asset, the other is asset digitization. In terms of digital assets, in June 2021, the scale of digital currency was 1.4 trillion US dollars in total market value; In terms of asset digitization, China's total asset size is 1300 trillion (about 185 trillion US dollars). If we can digitize the total assets of 185 trillion US dollars, it will be a huge economic volume.

Figure 2 Scale of intangible assets of S&P500 enterprises under the new economic system

It is necessary to introduce the contribution of intellectual property rights to the economies of China and the United States. In 2019, the US Department of Commerce released a report, which said that the contribution rate of intellectual property to the US economy was $5 trillion per year, involving 44% of the employment rate of the US and 62.5 million people; China lacks complete data, but China's new added value of copyright in 2019 was 7.32 trillion yuan, accounting for 7.39% of GDP, and the turnover of technology contracts was 2.8 trillion yuan. In 1984, China's turnover of technology contracts was only 700 million yuan. According to the report of the National Bureau of Statistics, 550000 technology contracts were signed in 2020, with a turnover of 282.52 billion yuan; From 730 million yuan in 1984 to 2.8 trillion yuan more than 30 years later, the turnover of technology contracts has increased by 4000 times, proving that the growth space of intellectual property transactions is infinite. Hong Kong has obtained huge commercial benefits from the traditional goods trade with the mainland in the past. In the future, in the field of intellectual property trade, if we seize this opportunity, Hong Kong and the mainland will be able to obtain huge commercial benefits from the export of technology, brand and copyright assets in cooperation.

The figure below shows the economic influence of digital assets relative to intangible assets. Digital assets mainly attract talents in the IT industry and financial industry (as shown in Figure 3). Intangible assets attract all-round talents, such as finance, culture, creativity, film and television, which are of great benefit to the real economy. Intellectual property transactions or trade are an indispensable bridge between the virtual economy and the real economy.

Figure 3 The impact of virtual currency versus intangible assets on the economy

That's all for my speech. Thank you for your listening and questions. There is an opportunity to further communicate with you after the meeting.