The Chinese central government and the government of the Hong Kong Special Administrative Region (HKSAR) on Friday inked Supplement IV to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), thus further opening up the mainland market to Hong Kong.
The agreement was signed by Henry Tang, Secretary of Finance of HKSAR government, and Vice Minister of Commerce Liao Xiaoqi, while being witnessed by HKSAR Chief Executive Donald Tsang and Minister of Commerce Bo Xilai.
Praising the deal, Tang said it would provide a slew of new opportunities for HK businesses, allowing them to enter the mainland market with full vigor.
Under the new CEPA supplement, the mainland will add 11 new service areas to Hong Kong, including the popular sports, environment and public utilities markets. The mainland has already opened 27 areas to Hong Kong, and the agreement promised further access to these areas such as banking, securities, tourism and insurance.
In banking, the minimum total asset requirement for a Hong Kong bank wishing to buy into a mainland counterpart will be lowered from US$10 billion to US$6 billion.
Mutual economic ties will be strengthened through the creation of green lanes aiding HK banks to set up branches on the mainland, and to encourage mainland banks to create subsidiary operations in Hong Kong.
In tourism, Hong Kong travel enterprises wanting to set up joint venture or wholly owned enterprises on the mainland will now need to show a minimum annual turnover of US$8 million and US$15 million respectively.
Hong Kong travel agencies in Hunan, Hainan, Fujian, Jiangxi, Yunnan, Guizhou and Sichuan provinces and Guangxi Zhuang Autonomous Region will be allowed to apply for the operation of group tours to HK and Macao for residents of these areas, extending a pilot scheme which has already been set up in Guangdong.
In relation to conventions and exhibitions, Hong Kong services suppliers will be allowed to organize exhibitions in Guangdong and Shanghai through cross-border supply on a pilot basis.
In addition, Hong Kong enterprises established in Guangdong and Shanghai will now gain access to organizing overseas exhibitions for mainland enterprises in these areas with similar support from the mainland in bringing international conventions and exhibitions to Hong Kong.
The capital investment required of Hong Kong services suppliers for setting up equity or contractual joint-venture medical institutions on the mainland will be lowered from 20 million yuan (US$2.6 million) to 10 million yuan (US$1.3 million).
With these new measures coming into force on Jan. 1, 2008, the mainland is expected to promulgate required regulations to allow their full implementation.
Originated in 2003, CEPA gave all HK products free tariff treatment if they meet CEPA rules of origin. On trade in services, the mainland has already allowed preferential treatment to Hong Kong services suppliers in 27 services.
Latest figures indicated that from 2004 to 2006, CEPA created 36,000 new jobs for Hong Kong residents and induced HK$5.1 billion additional capital investment into the SAR, thus coming as a financial boon to the area. The reverse has also proved true with 16,000 new jobs on the mainland being generated with HK$9.2 billion in additional capital investment from Hong Kong companies on the mainland.
(Xinhua News Agency June 29, 2007)