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Financial Secretary John Tsang and Chinese Vice-Minister of Commerce Jiang Zengwei hail the latest supplement to CEPA |
Hong Kong financial services firms will be among the industries gaining greater access to the Chinese mainland market following the latest supplement of the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and the mainland.
CEPA VI, signed by Hong Kong Financial Secretary John Tsang and Chinese Vice-Minister of Commerce Jiang Zengwei earlier this month, introduces 29 liberalisation measures covering 20 sectors, including tourism, finance and the legal profession. Two new sectors – research and development, and rail transport – have been added. The new CEPA additions take effect 1 October.
Guangdong once again serves as the testing ground for many of the pilot initiatives, including the banking sector. Hong Kong banks will be able to expand more easily in Guangdong, opening sub-branches in cities within the province. Qualified Hong Kong and mainland securities firms will be allowed to set up joint-venture securities investment advisory companies. Hong Kong and the mainland will also explore ways for mainland investors to invest in Hong Kong shares through "index-tracking exchange-traded fund," or ETFs.
Strategic Step
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Guangdong is the right place to test the pilot CEPA initiatives, says FHKI Chairman Clement Chen |
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"This represents another strategic move in the long term development of Hong Kong as the international financial centre for the mainland," said Peter Wong, Chairman of the Hong Kong Association of Banks and HSBC Group General Manager.
The latest initiatives, which bring the number of services sectors covered by CEPA to 42, also allow post-production on mainland domestic films to be done in Hong Kong. There will also be more opportunities for exhibition, shipping and publishing companies, as well as engineering and scientific research concerns, to establish on the mainland.
Hong Kong services suppliers can organise exhibitions in Beijing, Tianjin, Chongqing, Zhejiang Province, Jiangsu Province and Fujian Province on a pilot basis. Meanwhile, Hong Kong enterprises set up on a wholly owned, equity joint-venture or contractual joint-venture basis in the provinces and autonomous regions of Guangxi, Hunan, Hainan, Fujian, Jiangxi, Yunnan, Guizhou and Sichuan can organise overseas exhibitions on a pilot basis.
"We fully support these latest measures, which will facilitate trade and investment between Hong Kong and the mainland," said Andrew Brandler, Chairman of the Hong Kong General Chamber of Commerce (HKGC). "The Chamber made many detailed recommendations on banking, securities services, legal services, and construction and engineering. With most of these proposals included in Supplement VI and the mutual recognition of professional qualifications being enhanced, the financial sector in Hong Kong and Guangdong will both reap the benefits of further convergence," he added.
In the newly added sector of transportation services, Hong Kong services suppliers can construct, operate and manage the Shenzhen Metro Line Four project in Shenzhen in the form of wholly owned operations. They can also set up wholly owned shipping companies in second-tier ports in Guangdong to provide clerical and administrative services.
On research and development services, also a new addition, Hong Kong businesses can set up wholly owned enterprises on the mainland to provide research and experimental development services in the natural sciences and engineering.
The new supplement also eases visa restrictions on mainland tourists travelling to Hong Kong and Taiwan.
Test Ground
"Given the current economic conditions, we are glad to see that the newly signed agreement contains nine liberalisation measures that will operate in Guangdong as a test ground and allow more Hong Kong enterprises to operate businesses in the province," said HKGCC CEO Alex Fong.
The Federation of Hong Kong Industries (FHKI) said it, too, supported making Guangdong the testing ground. "Allowing Guangdong to be the trial-run location provides new opportunities for Hong Kong enterprises," said FHKI Chairman Clement Chen. "The Central Government can learn from Guangdong's experience to further perfect the liberalisation measures and eventually apply them to other regions. Many Hong Kong enterprises operating in Guangdong are used to using services from Hong Kong companies, and once these companies set up service points in Guangdong Province and directly provide service there, Hong Kong manufacturers can benefit from better convenience and efficiency."
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