Summary
- 23 liberalisation measures spanning 16 service sectors
- 3 new business sectors added, with 3 new service areas opened under the individually owned stores scheme
- 7 Guangdong pilot measures under CEPA service sectors
- Products with CEPA origin rules expanded by 3 to 1,633
Following the announcement by Vice Premier Li Keqiang in August 2011 to further open the mainland’s service market to Hong Kong, the Central and Hong Kong governments agreed on the package of liberalisation measures under Supplement VIII to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) on 13 December 2011.1
The new package, which will be implemented from April 2012, widens and deepens the liberalisation of 16 service sectors via 23 measures, including five measures under the three new sectors in respect of inter-disciplinary research and experimental development services; manufacturing services; and library, museum and other cultural services. With CEPA Supplement VIII, the Central government will expand the total number of liberalised sectors under CEPA from 44 to 47, while bringing the total number of liberalised measures beyond 300.
One of the important breakthroughs of CEPA Supplement VIII is the relaxation of the "substantive business operations" criterion for Hong Kong service suppliers (HKSS), with their business scope allowed on the mainland not restricted to the scope of their business in Hong Kong, and service suppliers will be for the first time allowed to apply for CEPA benefits on the mainland in sectors not confined to the 47 sectors.
Consistent with the pioneering step of CEPA Supplement VII2 in the development of the “six new industries” in which Hong Kong enjoys clear advantages, Supplement VIII includes measures such as allowing Hong Kong service suppliers (HKSS) in the testing of products for the China Compulsory Certification (CCC) System to test all existing products processed in Hong Kong that require CCC, and permitting HKSS to operate wholly owned hospitals beyond the five pilot provinces and municipalities (including Guangdong) to cover all municipalities and provincial capitals on the mainland.
CEPA Supplement VIII encompasses measures that will enhance the entry of Hong Kong’s financial industry into the mainland market, benefitting the banking and securities sectors. For example, mainland-incorporated banking institutions established by a Hong Kong bank will be allowed to engage in the sale and distribution of mutual funds, and Hong Kong will be allowed to invest in the mainland securities market by means of the Renminbi Qualified Foreign Institutional Investor (RQFII) programme, which was first outlined by Vice Premier Li Keqiang in August 2011, with the relevant regulations then announced on 16 December 2011. RQFII creates an effective route to recycle Hong Kong’s offshore RMB, which has already surpassed RMB 600 billion, into the mainland’s financial market. Further, the new CEPA package underlines the strengthening of financial cooperation with the mainland, such as supporting mainland banks to make use of Hong Kong's international financial platform to develop their international businesses, and bilateral co-operation in the development of insurance products, business operation and operational management.
Supplement VIII consists of seven Guangdong early and pilot implementation measures on the heels of the eight measures adopted under Supplement VII. In essence, cooperation between Hong Kong and Guangdong has been stipulated as a national policy since 2008.3 In the 12th Five-year Plan released by the Central government in March 2011, there was a dedicated chapter on Hong Kong with strong emphasis on deepening cooperation between Guangdong and Hong Kong and the implementation of the Framework Agreement on Hong Kong and Guangdong Co-operation, which was released in April 2010.4
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1 The ninth phase of CEPA liberalisation measures by virtue of Supplement VIII was signed on 13 December 2011, following eight yearly Supplements that were implemented between 2004 and 2011.
2 An analysis of the measures under Supplement VII to CEPA can be found at http://www.hktdc.com/info/mi/a/ef/en/1X06ZS6I/1/Economic-Forum/CEPA-2010-Liberalisation-Measures-Opportunities-For-Hong-Kong.htm
3 China’s National Development and Reform Commission announced in December 2008 the Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020) (http://en.ndrc.gov.cn/policyrelease/P020090120342179907030.doc).
4 The Chinese versions of the Framework Agreement on Hong Kong and Guangdong Co-operation and related workplan for 2010 can be found respectively at http://gia.info.gov.hk/general/201004/07/P201004070113_0113_63622.pdf and http://gia.info.gov.hk/general/201004/07/P201004070113_0113_63623.pdf.
