China's State Council is set ease restrictions on the trading of the Chinese currency, the renminbi, in Hong Kong under an agreement between the Mainland and the Special Administrative Region to expand the scope of the Closer Economic Partnership Arrangement (CEPA).
Under proposals currently being studied by Beijing, Hong Kong importers could be allowed to settle direct import trades from the Mainland in renminbi, while financial institutions in the Mainland could issue renminbi financial bonds in Hong Kong on a pilot basis.
At the opening of the 'Mainland, Hong Kong & Macau Trade & Economic Co-operation Forum' yesterday, which marked the third anniversary of CEPA's signing, Hong Kong's Chief Executive Donald Tsang stressed that the plan would be a "complex exercise". However, he added that the move would consolidate and develop Hong Kong's status as an international financial centre.
"The Hong Kong Government will maintain close liaison with the Mainland authorities to expedite the preparatory work for an early launch of these two types of new business," Mr Tsang explained.
Additional new measures under CEPA will also cover goods and services, and enhanced cooperation on intellectual property protection.
In the services sector, 10 areas will see new liberalisation measures. They are legal services, construction, information technology, convention and exhibition, audiovisual, distribution, tourism, air transport, road transport, and individually owned stores.
Some of the moves targeting legal services include:
In construction, Hong Kong service suppliers will be allowed to set up wholly-owned construction-engineering cost-consulting enterprises in the Mainland. The enterprise's performance in both Hong Kong and the Mainland will be taken into account in assessing its qualification in the Mainland.
Both sides are committed to encouraging mutual recognition of professional qualifications as part of the services rules under CEPA. Accordingly, a mutual recognition agreement between Mainland construction supervising engineers and Hong Kong building surveyors was signed on June 27 in Beijing, bringing the number of mutual-recognition agreements or arrangements under CEPA to 10.
Hong Kong travel agents will be allowed to set up wholly-owned or joint-venture operations in Guangdong Province, to apply to operate group tours to Hong Kong and Macau for residents of Guangdong Province on a pilot basis.
Hong Kong air-transport sales agencies may set up wholly-owned agencies in the Mainland. The registered capital requirement will be the same as that for Mainland enterprises.
All these measures will take effect starting from January 1, 2007, and the Mainland will work out the implementation rules.
Since January 1, the Mainland has granted all products of Hong Kong origin tariff-free treatment if applications by Hong Kong manufacturers met the CEPA rules of origin. Manufacturers may apply to include products that did not meet the agreed rules of origin in discussions that will be held twice a year.
Agreements on 37 product areas have now been worked out in the rules-of-origin discussions in the first half of the year, boosting the number of approved product areas from 1,370 to 1,407.
The 37 products include aquatic products, food and seasonings, chemical products, plastic and rubber products, and mechanical and electrical products. They will be eligible for zero tariffs starting from July 1.
Increasing intellectual property protection is another new initiative under CEPA, aimed at facilitating trade and investment. The Mainland Intellectual Property Protection Coordination Centre will be set up in Hong Kong to help in related information exchanges.
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