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Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)

Investment Agreement and Agreement on Economic and Technical Cooperation


The Investment Agreement and Agreement on Economic and Technical Cooperation (Ecotech Agreement) were signed on 28 June 2017 under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) between Hong Kong Special Administrative Region Government (HKSARG) and the Ministry of Commerce. Details are set out below.


2.The Mainland and Hong Kong signed the CEPA in 2003. Thereafter, pursuant to Article 3 of CEPA, the two sides broadened and enriched the content of CEPA and have since signed ten Supplements and two agreements1, expanding market liberalisation and further facilitating trade and investment. The latest Agreement on Trade in Services consolidates and expands services liberalisation commitments introduced under CEPA since 2003. It was implemented on 1 June 2016 to basically achieve liberalisation of trade in services between the Mainland and Hong Kong.

3.The National 13th Five-Year Plan states that the Central Government will step up efforts to further open up its markets to Hong Kong and advocate the enhancement of CEPA. The Mainland and Hong Kong signed the Investment Agreement and Ecotech Agreement to enhance CEPA in line with a modern and comprehensive free trade agreement, providing for promotion and protection of increasing investments between the two places as well as fostering economic and technical cooperation and exploring new areas of cooperation. The legal texts of the Agreements are available at the Trade and Industry Department's (TID) website.


Investment Agreement

4.The Investment Agreement covers investments, in the forms of establishment of enterprises or acquisition of assets on one side by an investor from the other side. Similar to international investment agreements, including our Investment Promotion and Protection Agreements (IPPAs) with foreign partners, the Investment Agreement provides for commitments of both sides relating to promotion and protection of investments. In addition, the Investment Agreement includes commitments of both sides with respect to admission of investments from the other side (i.e. the "market access" element). Since the commitments for admission of investments in services sectors have been covered under the Agreement on Trade in Services already implemented, the Investment Agreement will cover admission of investments outside the scope of the Agreement on Trade in Services (including manufacturing sectors, mining sectors and investment in assets, hereinafter referred to as "non-services sectors"). The provisions on investment protection under the Investment Agreement apply to investments in both services and non-services sectors. The key provisions of the Investment Agreement are highlighted in the following paragraphs.

Market Access

5.The substantive obligations relating to non-discriminatory treatment of investments and investors and "market access" for investments include -

  1. Article 5 (National Treatment);
  2. Article 6 (Most Favoured Treatment);
  3. Article 7 (Performance Requirements); and
  4. Article 8 (Senior Management, Boards of Directors and Entry of Personnel).

6.Pursuant to these obligations, both sides commit to according to investments and investors of the other side treatment no less favourable than that accorded to investments and investors of one side or any other party, imposing no performance requirements (such as requirement to export a given level or percentage of goods or services) on investments of the other side, and imposing no nationality requirements on senior management of enterprises which are investments of the other side, etc. Measures not conforming to the above obligations are scheduled under Annex 2 to the Agreement, using the negative listing approach. Under the Investment Agreement, Hong Kong investors enjoy more preferential investment access to the Mainland than investors from other countries and regions in specific non-services sectors2.

Investment Protection

7.The substantive obligations pertaining to investment protection are similar to those in our IPPAs with foreign partners, including -

  1. Article 11 (Expropriation);
  2. Article 12 (Compensation for Losses);
  3. Article 13 (Subrogation); and
  4. Article 14 (Transfers).

Under these provisions, the two sides commit to providing for investment protection including non-discriminatory treatment in compensation for losses owing to war, a state of emergency, riot, natural disaster or other similar events; compensation for expropriation of investments; recognition of transfer of rights under the Investment Agreement upon payment made by one side or its agency to an investor under a guarantee or a contract of insurance with respect to its investment; transfer abroad of investments and returns; etc.

Investment Facilitation and Settlement of Investment Disputes

8.The Investment Agreement puts in place measures on investment facilitation. For example, for examining and approving applications for establishment of investments by Hong Kong investors in the Mainland, the Mainland will endeavour to establish uniform standards and procedures in examining and approving investment applications, stipulate a reasonable timeframe for examining investment applications and making decisions, keep the costs of the investors in the application process to the lowest on a best endeavour basis, etc.

9.The Investment Agreement provides a mechanism for settlement of an investment dispute arising from an alleged breach of the substantive obligations of the Agreement by one side causing loss to an investor of the other side. The mechanism lists available means for dispute settlement by the respective sides -

  1. amicable consultation between the disputing parties;
  2. complaint handling procedures;
  3. coordination within the government or between the two sides to oversee dispute resolution of the respective sides;
  4. mediation; and
  5. legal proceedings as provided for under the domestic laws on the respective sides.

Mainland's Liberalisation Measures

10.The Investment Agreement will be the first investment agreement of the Mainland with pre-establishment national treatment commitments in the form of negative list for investments in non-services sectors. In short, the Mainland commits to providing national treatment to investments and investors of Hong Kong in all non-services sectors, except the 26 measures3 listed in Annex 2.

11.Hong Kong enterprises seeking to establish commercial presence4 on the Mainland in non-services sectors with preferential access provided for under the Investment Agreement are required to meet the definition of "investors" under the Investment Agreement. The specific requirements include the Hong Kong enterprises must be incorporated or established in Hong Kong, and must fulfil the requirements of minimum period of operation, payment of profit tax, owning or renting business premises, and employment of staff for its substantive business operations. The Hong Kong enterprises must apply for Hong Kong Investor Certificates from Trade and Industry Department. Annex 1 to the Agreement sets out the requirements pertinent to the definition of "investor". Such requirements are similar to those pertinent to Hong Kong Service Suppliers under the Agreement on Trade in Services at present. Investors other than those making investments in the form of establishment of commercial presence, such as by acquiring assets, are not required to meet the specific requirements on substantive business operations in Hong Kong and are not required to apply for the Hong Kong Investor Certificate.

12.The "Most-Favoured Treatment" provision of the Agreement specifies that any preferential treatment the Mainland accords to investments and investors from other countries or regions, if more preferential than that under CEPA, will be extended to Hong Kong investments and investors.

Hong Kong's Liberalisation Measures

13.Following past practice, Hong Kong will not impose new discriminatory measures on Mainland investments and investors in non-services sectors covered by the Agreement.

14.The Agreement shall be implemented as from 1 January 2018.

Ecotech Agreement

15.The Ecotech Agreement updates and strengthens previous CEPA commitments on cooperation across various sectors and a range of trade and investment facilitation areas, as well as adds new cooperation areas in relation to "Belt and Road" Initiative and Sub-regional Cooperation.

16.Substantive elements of the Ecotech Agreement include -

  1. Chapter 3 on Cooperation in Economic and Trade Areas of the "Belt and Road" Initiative lays the foundation for the two sides to take forward cooperation at different levels and across a wide range of areas, including those where Hong Kong has expertise and advantages, and highlights participation by the Hong Kong business community in the "Belt and Road" Initiative. Under the framework of the Ecotech Agreement, relevant agencies and industry participants on the two sides can map out detailed activities of interest to them;
  2. Chapters 4 and 6 on Cooperation in Key Areas and Trade and Investment Facilitation respectively charts the course of and updates the activities in major sectors such as Financial Cooperation (Article 5), Cooperation in Tourism (Article 6), Cooperation in Legal and Dispute Resolution Services (Article 7), Cooperation in Accounting (Article 8), Cooperation in Innovation and Technology (Article 12), Cooperation in Electronic Commerce (Article 14), Cooperation in Intellectual Property (Article 16), and Quality Supervision, Inspection and Quarantine (Article 23).
  3. Chapter 5 on Sub-regional Economic and Trade Cooperation brings the ongoing cooperation between Hong Kong and different regions in the Mainland, including the Pan-Pearl River Delta Region (Article 19), Pilot Free Trade Zones (Article 20), as well as Qianhai, Nansha and Hengqin (Article 21), under a systematic framework. Responsible agencies on the two sides will continue to enhance cooperation under their respective purview in different regions.

A summary of major cooperation activities in the Ecotech Agreement is at Annex. The Agreement came into force on the date of signing.


17.The Investment Agreement brings enhancement to the overall CEPA framework through expansion of market access commitments to non-services sectors and introduction of obligations on investment protection. The Investment Agreement ensures stability in the investment regimes of both sides, thereby upholding investors' confidence and promoting investment liberalisation and facilitation.

18.The Ecotech Agreement consolidates and updates the economic and technical cooperation activities set out in CEPA and its Supplements to cater for the trend and needs for the development of Hong Kong and the Mainland. It also builds the basis and sets the direction for closer cooperation between the two places in future. The Ecotech Agreement includes the cooperation in the economic and trade areas of the "Belt and Road" Initiative and Sub-regional Cooperation under the systemic framework of CEPA, thereby providing Hong Kong industries with conducive opportunities for participation in the national development strategies.

19.With the two new Agreements, CEPA becomes a comprehensive modern free trade agreement covering four important pillars of trade in goods, trade in services, investment, and economic and technical cooperation. CEPA ensures that Hong Kong traders continue to enjoy the most preferential treatment in accessing the Mainland market.


20.For enquiries on issues related to CEPA, please contact the relevant sections in the TID.

28 June 2017




1 The two agreements are, namely, the Agreement between the Mainland and Hong Kong on Achieving Basic Liberalisation of Trade in Services in Guangdong signed in December 2014, and the Agreement on Trade in Services signed in November 2015.

2 Including mining of special and scarce coals; smelting of tungsten; manufacture of common ships (including subsection); manufacture of civil aircrafts (for trunk and branch lines) and civil helicopters (of three tons or more); and manufacture of general purpose aircrafts. The Mainland also commits that when the franchise is completely liberalised to Mainland investors, Hong Kong investors will be allowed to perform, in the form of equity joint venture or cooperation, exploitation of land-based petroleum oil, natural gas and coal seam gas.

3 Covering sectors such as exploitation of petroleum oil and natural gas; exploitation and smelting of mineral products; manufacture of vehicles; manufacture of ground effect or water effect aeroplanes and the manufacture of drones and aerostats; production of tobacco products; investment in financial products; traditional arts and crafts and production of Chinese medicinal products, etc.

4 Constituting, acquiring or maintaining an enterprise.