Special Hong Kong Investment Incentives Denied By Beijing Official

by Carla Johnson, Investors Offshore.com

02 November 2001

Confusion reigned in Hong Kong today, as the beleaguered jurisdiction reacted to the announcement that one of the few pieces of good news received recently wasn't, in fact, that good after all.

Beijing city officials said last week that Hong Kong-Mainland joint ventures would be treated as 'local companies', which would entitle them to various tax breaks and assistance, and that they would receive preferential treatment over foreign businesses.

However, Foreign Trade and Economic Co-operation Minister Shi Guangsheng poured cold water on claims that the SAR would receive priority treatment and special privileges, stating instead that the announced incentives simply meant that the preferential treatment offered by the mainland authorities to state enterprises would in future be extended to private enterprises and all foreign-Beijing joint ventures.

According to a South China Morning Post report on Thursday, other top Chinese officials have supported the Minister's comments, confirming that Hong Kong investors and businesses will not in fact receive preferential treatment. The incentive package (as initially announced, at any rate) had been applauded by the SAR's business community, who hoped that it would revive the jurisdiction's economy.

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