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Expanded CEPA lends strength to Hong Kong
By Dai Yan (China Daily)
Updated: 2004-08-28 00:08
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.
An Min(R),
vice-minister of commerce shakes hands with Henry Tang, financial
secretary of Hong Kong Special Administration Region (SAR) at the signing
ceremony. [newsphoto] |
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 per cent 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 per
cent in the second quarter of 2004 on a seasonally adjusted basis from a year
earlier, bettering forecasts of an 11 per cent increase.
The government also revised upwards the full-year economic growth target to
7.5 per cent from the initial 6 per cent.
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.
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