Policies to boost ties across the boundary

(By George Ng, Chen Jia,June 28, 2012 - 9:59am, http://www.chinadailyapac.com)

Hong Kong is set to receive a big boost in its economic and social development after the central government announced a package of policies to boost economic and cultural relations between the city and the mainland.

The policy package, details of which will be unveiled by relevant government agencies ahead of the July 1 celebration of the 15th anniversary of Hong Kong’s handover, covers cooperation in six broad areas, including trade, finance, education, science and technology and tourism, as well as closer partnership between Hong Kong and neighboring Guangdong province, the official Xinhua News Agency said on Wednesday, citing a State Council statement.

In terms of trade and economic cooperation, the mainland will sign with Hong Kong another appendix — the 9th supplementary agreement — to the Closer Economic Partnership Arrangement (CEPA), a free trade pact that allows qualifying products, companies and residents of Hong Kong preferential access to mainland markets.

The CEPA and its previous supplements have benefited 47 sectors in the city with 300 preferential measures, according to data from the Hong Kong Trade Development Council. Many of the preferences surpass the concessions made by the country upon its accession to the World Trade Organization.

As part of its efforts to help mainland enterprises expand overseas, the central government will encourage enterprises from both sides to invest abroad together, leveraging Hong Kong’s external connections and rich experience in dealing with foreign companies.

Meanwhile, the central government will promote coordination among airports, harbors and train systems in the Pearl River Delta including Hong Kong in another effort to promote economic integration. It will also ease restrictions on small businesses run by Hong Kong residents on the mainland, allowing them to expand their offices and hire more staff.

In a move that will bolster yuan businesses in Hong Kong and accelerate the internationalization of the yuan, the central government will encourage more foreign investors to conduct trade settlements and investment in Hong Kong with the Chinese currency.

With the help of Hong Kong’s open capital market, the yuan’s internationalization can be accelerated by diversifying the offshore yuan products, which in turn requires the regulators to expand the use of the yuan for both investment and trade, said Chen Daofu, policy research chief of the Financial Research Institute at the State Council’s Development Research Center.

Xu Hongcai, an economist with the China Center for International Economic Exchanges, also believes that encouraging third parties to use yuan to settle trade in Hong Kong is a key step in the process of the yuan internationalization.

Aside from this move, the central government also unveiled other financial policies including improving the variety of offshore yuan-based services in Hong Kong, facilitating long-term investment from Hong Kong in the mainland capital market.

The central government will also push forward joint ventures for stock exchanges in Hong Kong, Shenzhen and Shanghai, as well as issue bourse-traded funds listed on both Hong Kong and mainland stock markets.

Hong Kong financial institutions will be allowed to set up consumer finance companies in Guangdong, and financial cooperation between Hong Kong and Guangdong will be enhanced through a pilot financial reform program to be implemented in the Pearl River Delta.

To strengthen cooperation in education, exchanges between students and faculties from Hong Kong and mainland universities will be expanded. Meanwhile, youth centers will be set up in Guangzhou and Shenzhen to facilitate exchanges with Hong Kong. Hong Kong colleges are welcome to set up educational institutions in Guangdong, the State Council statement said.

To boost cooperation in science and technology, Hong Kong scientists and engineers are encouraged to take part in national scientific research projects while key national laboratories will start a new round of selecting partner labs from Hong Kong to conduct cooperative research projects.

In support of Hong Kong’s tourism, mainland tourists traveling to Taiwan as part of package tours from Hong Kong will be allowed to continue traveling to Japan or the Republic of Korea using the same passenger ship they take to Taiwan.

In a move to bolster cultural ties, the mainland will simplify procedures for allowing Hong Kong-produced films to be screened in Guangdong province.