Closer partnership with Chinese mainland makes HK more prosperous

Closer relationship between Hong Kong and the Chinese mainland is vital to the special region's sustainable economic prosperity, most Hong Kong economists make the same comments as the implementation of a partnership agreement between the two sides entering the third year.

The Closer Economic Partnership Agreement, or CEPA, a free trade pact-analogue between the Chinese mainland and the Hong Kong Special Administrative Region (HKSAR) was signed in 2003, when Hong Kong's economy experienced its most difficulty, and helped the special administrative region resume its economic health with zero tariff for trade in goods, investment facilitation and individual visit scheme.

Henry Tang, the Financial Secretary of HKSAR said, "CEPA especially opens the door of the mainland market for Hong Kong financial service sector and further consolidate Hong Kong's status of international financial center."

HSBC, the leading bank in Hong Kong, announced Tuesday that with the approval from China Banking Regulatory Commission, the bank's Nanjing Branch will start RMB services in the third quarter of this year.

However, HSBC is only one of the beneficiary from Hong Kong banking industry. Three Hong Kong banks are approved to open branches and five are allowed to start insurance business in the Chinese mainland.

Besides, banks in Hong Kong are allowed to provide exchanging, depositing and remitting services of RMB since early 2004. According to statistics, the RMB savings of Hong Kong citizen amounted to 23 billion yuan by the end of 2005.

When talking about the investment chances bringing in by CEPA, Frederick Ma, Secretary for Financial Services and the Treasure of HKSAR, said, "CEPA makes Hong Kong a more attractive investment platform in the area of Asia-Pacific."

The closer relationship in economic exchanges made foreign investors much more confident in the investment market of Hong Kong and thus promote 32 overseas companies establish their headquarters in Hong Kong, who see the place as a springboard to the huge market of the Chinese mainland.

Ma said because of the implementation of the agreement, many famous mainland enterprises are approved to list in Hong Kong, pushing the market going up 3 percent each year since 2003.

Thus the slumping Hong Kong stock market began to turn bullish until the Hang Seng index broke 17,000 points this May.

Some Hong Kong economists said the newly proposed 11th five- year plan showed full support to Hong Kong's developments in finance, shipping, tourism and information industry, which will further consolidate the city's special economic status.

Henry Tang said in order to keep the leading edge of Hong Kong, the cooperation between the Chinese mainland and Hong Kong should be further enhanced on the basis of complement with each other and win-win development.

Source: Xinhua