Press Release 2007
Agreement reached on CEPA expansion
Friday, June 29, 2007
The Hong Kong Special Administrative Region Government and the Central People's Government today (June 29) agreed on further services liberalisation and economic co-operation under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
The Financial Secretary, Mr Henry Tang and the Vice-Minister of Commerce, Mr Liao Xiaoqi, signed the Supplement IV to the CEPA. The Chief Executive, Mr Donald Tsang, and the Minister of Commerce, Mr Bo Xilai, witnessed the signing.
Welcoming the signing of the Supplement IV to the CEPA, Mr Tang said the new package of liberalisation and co-operation measures would provide further and broader opportunities for Hong Kong business and reinforce Hong Kong's comparative advantages in better tapping the potential of the Mainland market.
"The CEPA package provides a positive response to a number of recommendations in the Final Report of the Economic Summit on China's 11th Five-Year Plan and the Development of Hong Kong, which call for the opening up of further market opportunities on the Mainland," Mr Tang said.
Under Supplement IV to the CEPA, the Mainland will introduce 40 liberalisation measures in 28 services areas, including existing ones such as banking, tourism, convention and exhibition, and medical, plus 11 new ones including elderly services, environmental services and public utilities. The two sides will also enhance co-operation in finance, convention and exhibition, and mutual recognition of professional qualifications.
In banking, the minimum total asset requirement for a Hong Kong bank acquiring a shareholding in a Mainland bank will be lowered from US$10 billion to US$6 billion. Both sides will enhance co-operation including establishing green lanes for Hong Kong banks to set up branches in the central western and north eastern areas and in Guangdong, and encouraging Mainland banks to set up subsidiary operations in Hong Kong.
In relation to conventions and exhibitions, Hong Kong services suppliers will be allowed to organise exhibitions in Guangdong and Shanghai through cross-border supply on a pilot basis. In addition, Hong Kong enterprises established in Guangdong and Shanghai will be allowed to organise overseas exhibitions for Mainland enterprises in these areas. The Mainland will also support Hong Kong in attracting and organising large scale international conventions and exhibitions.
In tourism, the minimum annual business turnover required of a Hong Kong travel enterprise setting up joint venture and wholly owned enterprises on the Mainland will be reduced to US$8 million and US$15 million respectively. Hong Kong travel agencies established in Guangxi, Hunan, Hainan, Fujian, Jiangxi, Yunnan, Guizhou and Sichuan provinces will be allowed to apply for the operation of group tours to Hong Kong and Macau for the permanent residents in these provinces, an extension of similar arrangement already in place in Guangdong on a pilot basis.
The required capital investment required of Hong Kong service suppliers for setting up equity or contractual joint-venture medical institutions on the Mainland will be lowered from RMB20 million to RMB10 million.
In addition, Supplement IV to the CEPA opens up the Mainland market in 11 new service areas. Hong Kong service providers will be allowed to operate elderly service agencies in the form of wholly-owned private non-government enterprises to provide elderly services in Guangdong Province on a pilot basis. Hong Kong service providers will also be allowed to establish wholly-owned enterprises to provide environmental services on the Mainland. On public utilities, Hong Kong service providers will be allowed to set up wholly-owned operations to construct and operate networks of gas, heating, water supply and water drainage for medium-sized cities on the Mainland.
All the services liberalisation measures will come into force on January 1, 2008. The Mainland will work out and promulgate the necessary implementation rules and regulations as appropriate.
Mr Tang said CEPA had played an important role in the economic development of both Hong Kong and the Mainland. The latest study of the Administration indicated that between 2004 and 2006, CEPA generated 36,000 new jobs for Hong Kong residents and induced HK$5.1 billion additional capital investment in Hong Kong. CEPA also created 16,000 new jobs for Mainlanders and attracted HK$9.2 billion additional capital investment by Hong Kong companies on the Mainland.
"The implementation outcomes indicate that CEPA is a mutually beneficial arrangement, allowing Hong Kong to explore the vast Mainland market while assisting the Mainland in integrating with the world economy," Mr Tang said.
"Both sides will continue to ensure the smooth implementation of CEPA and seek to further enrich its content."
The CEPA was first signed in June, 2003. Under CEPA, the Mainland has agreed to give all products of Hong Kong origin tariff free treatment if they meet the CEPA rules of origin. On trade in services, the Mainland has already allowed preferential treatment to Hong Kong service suppliers in 27 service areas. Details on CEPA including the newly agreed liberalisation and co-operation measures in the Supplement IV to the CEPA are available on the Trade and Industry Department's CEPA dedicated website at http://www.tid.gov.hk/english/cepa/index.html.