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Trade and Industry Department The Government of the Hong Kong Special Administrative Region
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Press Release

Further economic and trade co-operation and exchanges agreed under CEPA
Thursday, May 27, 2010

The Hong Kong Special Administrative Region Government (HKSARG) and the Central People's Government today (May 27) reached agreement on further liberalising trade in services and enhancing co-operation in trade and investment facilitation under the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).

Witnessed by the Chief Executive, Mr Donald Tsang, and other guests, the Financial Secretary, Mr John C Tsang, and the Vice-Minister of Commerce, Mr Jiang Zengwei, signed the Supplement VII to CEPA today.

The Supplement VII to CEPA provides for 35 market liberalisation and trade and investment facilitation measures in 19 sectors. Among them, 27 are liberalisation measures in 14 service sectors, of which eight are measures for "early and pilot implementation".

The Supplement VII further relaxes the market access conditions in 14 service sectors, which comprise construction; medical services; technical testing, analysis and product testing ; specialty design; audiovisual services; distribution; banking; securities; social services; tourism; cultural services; air transport; qualification examinations for professionals and technicians; and individually owned stores. Among them, "technical testing, analysis and product testing" and "specialty design" are new sectors, bringing the total number of liberalised service sectors under CEPA from 42 to 44. The major market liberalisation measures are:

On medical services, Hong Kong service suppliers (HKSS) are allowed to set up wholly owned hospitals in the municipalities of Shanghai and Chongqing, and the provinces of Guangdong, Fujian and Hainan. They are also allowed to set up convalescent hospitals in the form of wholly owned, equity joint venture or contractual joint venture in Guangdong Province.

No requirement is imposed on the total investment in setting up hospitals by HKSS on an equity joint venture or contractual joint venture basis in Guangdong Province, and no restriction is imposed on the ratio of capital investment between Hong Kong and Mainland partners in setting up hospitals in the form of equity joint venture or contractual joint venture in the municipalities of Shanghai and Chongqing, and the provinces of Guangdong, Fujian and Hainan.

Furthermore, 12 categories of statutory healthcare professionals who are registered to practise in Hong Kong (medical practitioners, Chinese medicine practitioners, dentists, pharmacists, nurses, midwives, medical laboratory technologists, occupational therapists, optometrists, radiographers, physiotherapists and chiropractors) are allowed to provide short-term services in the Mainland.

On tourism, Hong Kong travel agents established on a wholly owned or joint venture basis in Beijing and Shanghai municipalities are allowed to apply to operate, on a pilot basis, group tours to Hong Kong and Macao for residents registered with permanent residence in the Beijing and Shanghai municipalities.

On banking, a Hong Kong bank that has maintained a representative office in the Mainland for more than one year can apply to set up a wholly foreign-funded bank or a foreign bank branch. A Hong Kong bank's operating institution in the Mainland can apply to conduct renminbi business, if it has been operating for more than two years and profitable for one year prior to the application. Foreign banking institutions established in the Mainland by Hong Kong banks can establish specialised institutions to provide financial services to small enterprises.

On securities, the Mainland and Hong Kong will deepen co-operation in financial services and product development, and ETF (open-end index-tracking exchange-traded funds) constituted by Hong Kong listed stocks will be launched in the Mainland at an appropriate time.

On construction, Hong Kong professionals who have obtained the Mainland's class 1 registered architect qualification or class 1 registered structural engineer qualification, are allowed to act as partners to set up construction and engineering design offices in the Mainland, without restrictions on the ratio of the number of Hong Kong partners to the number of Mainland partners, the ratio of the total capital contributed by the Hong Kong partners to that by the Mainland partners, or the Hong Kong partners' period of residence in the Mainland.

Hong Kong professionals who have obtained the Mainland's class 1 registered architect qualification or class 1 registered structural engineer qualification through mutual recognition are also allowed to register and practise in Guangdong.

On air transport, sales agencies set up by HKSS in the Mainland in the form of wholly owned enterprises, equity joint venture or contractual joint venture, are allowed to operate air transport sales agency services on the domestic routes in the Mainland. HKSS can also operate aircraft repair and maintenance services in the Mainland in the form of wholly owned enterprises or with majority shareholding in the enterprises.

On distribution, distribution enterprises set up by HKSS in the Mainland are allowed to sell books published in Hong Kong.

On technical testing, analysis and product testing, testing organisations in Hong Kong can co-operate with designated Mainland organisations to undertake testing of products under the China Compulsory Certification (CCC) System on a pilot basis, in respect of selected products listed in the CCC Catalogue and processed in Hong Kong. These testing organisations have to be accredited by the accreditation body of the HKSARG to be capable of performing testing for the relevant products under the CCC System.

On audiovisual services, HKSS are allowed to set up enterprises on a wholly owned, equity joint venture or contractual joint venture basis in the Mainland to produce video and sound recording products.

On specialty design, HKSS are allowed to set up wholly owned enterprises in the Mainland to provide specialty design services.

Apart from benefiting the larger enterprises, measures in the Supplement VII to CEPA will also benefit individuals and small businesses, such measures include allowing registered healthcare professionals to provide short-term services in the Mainland, allowing Hong Kong permanent residents to take the qualification examination for real estate valuer in the Mainland, and allowing Hong Kong permanent residents with Chinese citizenship to set up individually owned stores in the Mainland to provide services in the areas of marriage, renting and leasing of comics books, and pet clinics.

All the services liberalisation measures under the Supplement VII to CEPA will take effect from January 1, 2011.

The two sides also agreed to enhance trade and investment facilitation. For co-operation in cultural and environmental industries, Supplement VII fosters the joint development of the industries of both sides, mainly through strengthening exchanges and communication between relevant organisations and the trade of both sides.

For co-operation in innovation and technology industry, both sides agree to progressively involve Hong Kong research institutes and enterprises in the national innovation system, encourage Hong Kong research personnel and organisations to participate in national science and technology projects, and strengthen exchanges and co-operation between the two places in high technology research, development and application, fundamental scientific research, etc.

As regards co-operation on education, both sides agreed to support the Mainland's education institutions and Hong Kong's higher education institutions to jointly provide education programmes, to establish joint research facilities and to nurture talent at undergraduate or above level in the Mainland.

For testing and certification, both sides agreed to strengthen co-operation between the relevant authorities of both sides, and the Mainland will also assist Hong Kong's testing laboratories to be recognised under the international multilateral systems on mutual recognition of testing and certification that are open to national member bodies.

On the whole, the Supplement VII to CEPA will expedite and facilitate Hong Kong service industries to enter and expand in the Mainland market, and foster service industries' integration and professional exchanges of the two sides. Moreover, most of the market liberalisation and facilitation measures cover the four pillar industries and the six economic industries in which Hong Kong has a competitive edge, and as such will help consolidate Hong Kong's status as an international financial, trade, shipping, logistics and high value-added service centre, and lay the foundation for the two sides to jointly develop education, medical services, testing and certification, environmental, innovative technology and cultural industries.

Details on CEPA are uploaded to the Trade and Industry Department's CEPA website: www.tid.gov.hk/english/cepa/index.html

Separately, the HKSARG has just updated the assessment of the impact, to the Hong Kong economy, of liberalisation of trade in services under CEPA and the implementation of the "Individual Visit Scheme" (IVS). The assessment report reflects that CEPA has continued to benefit Hong Kong enterprises and the economy as a whole.

During 2004-09, cumulative business receipts obtained by service companies in Hong Kong due to CEPA from Mainland-related business reached HK$61.6 billion. During 2007-09, CEPA-induced business receipts obtained by operations established by HKSS in the Mainland amounted to HK$198.5 billion. During the same period, companies in Hong Kong obtained additional business receipts totalling about HK$55.1 billion due to CEPA.

Under CEPA, the IVS has been extended to 49 Mainland cities. By March 2010, over 49 million Mainland visitors have come to Hong Kong under the scheme. In cumulative terms, during 2004-09, IVS visitors brought about additional spending totalling over HK$84.8 billion. 

As at end 2009, due to liberalisation of trade in services and IVS under CEPA, a total of 54,700 jobs were created in Hong Kong, and 40,600 jobs were created in the Mainland.

Ends