The mainland and Hong Kong broadened their free trade pact on Friday, adding 713 types of goods to the zero-tariff list.
A further change allows Hong Kong companies to enter a variety of businesses ranging from insurance sales and media marketing.
An Min, vice-minister of commerce and Henry Tang, financial secretary of Hong Kong Special Administration Region (SAR), signed the expanded agreement for Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) in Beijing after five high-level meetings that have taken place following the signing of the CEPA in June last year.
Under the expanded deal, tariffs will be exempted on 529 goods currently being produced by Hong Kong manufacturers. Another 184 goods that are not now made here will be included, so that interested companies might discover their potential and start making them.
"Now nearly all goods produced in Hong Kong will enjoy zero tariffs," An said.
In the services area, the central government agreed to grant preferential treatment to Hong Kong companies in eight more industries, including patent and trademark agencies, airport services, entertainment, information technology, job agencies and certification.
Beijing also granted Hong Kong firms broader access to mainland markets in 11 out of 18 service sectors already enjoying preferential treatment, including accounting, medical and legal services, and car dealerships.
The deal will allow Hong Kong companies to sell books, newspapers, magazines, medicine, and agricultural chemicals in China. Hong Kong companies will be allowed to build and operate cinemas to screen movies in the mainland.
Hong Kong business people will be able to set up their own companies to sell oil products, both retail and wholesale.
Beijing had previously agreed to eliminate tariffs on 374 Hong Kong goods starting in January and to open 18 service sectors to Hong Kong companies.
The expanded CEPA will be effective from the beginning of next year.
An said the expanded agreement was mostly made on more than 700 suggestions from the Hong Kong business sector -- including an increase in tariff-free products and markets on the mainland for service providers.
CEPA is a living agreement, and new measures can be added each year according to the needs of the business sector.
"The central government and the Hong Kong SAR government will continue to pursue further liberalization on goods and services in the latter phases under CEPA through established liaison mechanisms," Tang said.
Prominent business figures in Hong Kong are calling for bolder measures from the central government under the CEPA framework in a bid to buoy up Hong Kong's economy.
Both An and Tang say they believed the pact will improve Hong Kong's economy.
An said that Hong Kong's unemployment rate has dipped by 2 percentage points, and the index of Hong Kong stock market has surged by 50 percent since the CEPA was implemented.
"We cannot say that those are all driven by the CEPA, but we can say the CEPA contributed some of the confidence to Hong Kong's economy," An said.
Tang said Hong Kong's economic figures could give a glimpse of the improving environment.
The Hong Kong SAR government said Friday afternoon that its GDP rose 12.1 percent in the second quarter of 2004 on a seasonally adjusted basis from a year earlier, bettering forecasts of an 11 percent increase.
The government also revised upwards the full-year economic growth target to 7.5 percent from the initial 6 percent.
The numbers are quite strong, better than expected. This implies a rebound in domestic demand including consumption, investments and strong trade.
Hong Kong analysts expected the expansion of the scope of products' eligible for CEPA zero-tariff treatment will lead to an inflow of investments in Hong Kong.
An also said the central government is preparing to streamline administrative procedures for private businesses' investment in Hong Kong.
An said he thought that the CEPA would not have much of an impact on the mainland market.
Official statistics indicate that, by the end of July, goods worth HK$500 million (US$64 million) were exported to the mainland on a zero-tariff basis, An said.
Most of the deals involved textiles, pharmaceuticals, electronics and plastic products. The 713 new kinds of products with zero tariffs include food, cosmetics, watches and jewellery.
(China Daily August 28, 2004)