Wednesday, August 24, 2011

New Policies Benefiting Both Hong Kong and China

Last Wednesday, 17 August 2011 should be a historical date that we all need to remember. On that day, during a forum about China 12th five-year plan (2011-2015), China Vice Premier Li Keqiang presented the 36 new policies that give HKSAR (Hong Kong Special Administrative Region Government) substantive and clear directions for its economic development. Below are the complete details of these 36 unveiled new measures in 6 different economy-beneficial areas:

(A) Trading

(1) The mainland China will further open up its services sector to Hong Kong. By the end of China 12th five-year plan (read also: China's 12th 5-year plan in details), the mainland China services sector should basically achieve trade liberalization with Hong Kong through the "Closer Economic Partnership Arrangement" (CEPA). Implement properly the CEPA and its additional agreements by simplifying approval process. Expect to sign the "Closer Economic Partnership Arrangement" (CEPA) Additional Agreements Number 8 by the end of this year, in order to add more cooperative contents for offering convenience to investment trades. Continue to drive the "trial first" policy within the Guangdong Province.

(2) Continuously support Hong Kong to participate in multinational and regional economic cooperation. Study possibility of allowing Hong Kong to participate in free trade agreements already signed by the mainland China. This may also give possibility for HK's participation in the Association of Southeast Asian Nations (ASEAN), in order to compete directly with Singapore. Will consider more about the benefits of Hong Kong economy in future talks with China's trading partners. Enhance mutual alignments between the mainland China and HK in the World Trade Organization (WTO) and Asia Pacific Economic Cooperation (APEC).

(3) Drive the "go global" policy through joint-enterprises of Hong Kong and the mainland China. Take full advantages of HK's services sectors such as finance, law, accounting, investment consultation etc to encourage joint-investment, joint-tender, or joint-lead types of project cooperation between HK and the mainland Chinese enterprises so as to develop international investment and infrastructural markets together.

(4) Support stable development, transformation and upgrade of Hong Kong manufacturing enterprises operating in the mainland China. Establish simplified measures and mechanisms to encourage those HK manufacturing enterprises to transform their market focus from exports to domestic sales.

(5) Support foreign enterprises (including Hong Kong enterprises) to use Renminbi (RMB, or called yuan, or CNY) to invest directly in the mainland China. Revise foreign investment management rules to drive the development of RMB FDI (foreign direct investment).

(6) Support development and operating cooperation between the Hong Kong Mass Transit Railway (MTR) Corporation Ltd (MTR stock code: and the counterparts in Beijing, Shanghai, Shenzhen, and later in other cities like Hangzhou at Zhejiang Province of the Eastern China.

(B) Finance

(7) Launch ETFs (Exchange-Traded Funds) linked to Hong Kong stock market indexes in the mainland China.

(8) Continue to support more mainland Chinese enterprises to list in Hong Kong Stock Exchange (HKSE stock code:

(9) Allow Hong Kong banks to participate in the sales of mutual-funds in the mainland China.

(10) Seriously implement the "Closer Economic Partnership Arrangement" (CEPA) policy to raise the open-up level for Hong Kong bankers. Support Hong Kong banks to expand and reasonably distribute its branches within the Guangdong Province.

(11) Allow Hong Kong insurance companies to enter into the mainland China market by setting up branches or by taking stakes of mainland insurance firms. Enhance mutual cooperation in areas of insurance products R&D (Research and Development), as well as insurance business and operational management.

(12) Extend the cross-border RMB trade settlement program to cover the whole nation (previously it covered only 20 mainland cities and provinces), so as to offer convenience for more companies to use RMB to trade with Hong Kong and to reinforce the status of HK as a RMB trade settlement centre.

(13) Start a pilot program to allow foreign banks to raise RMB capitals, in order to offer convenience for Hong Kong enterprises and banks to invest in the mainland China.

(14) Extend the types of the mainland RMB bond issuers in Hong Kong market by allowing mainland enterprises to issue RMB bonds in HK (previously only financial companies could issue RMB bonds in HK). Steadily expand the size of RMB bonds issued in HK by the mainland enterprises.

(15) Continue to drive the pilot program for interbank bond market between 3 types of foreign institutional investment banks: foreign central banks, RMB clearing bank in Hong Kong and Macau (i.e.: Bank of China Hong Kong Branch; BOCHK stock code:, and foreign participating banks.

(16) Encourage Hong Kong to develop innovative offshore RMB financial products.

(17) Allow RMB QFII (Renminbi Qualified Foreign Institutional Investors), or called RQFIIs or mini-QFII funds, with initial quotas of RMB 20 billion for qualified HK companies to use RMB to directly buy domestic Chinese stocks or bonds.

(C) Social Affairs

(18) Assure steady supply of necessary resources to Hong Kong market, including agricultural products such as meats, fruits, vegetables, and other resources such as electricity and natural sands.

(19) Expedite the development of Hong Kong section of the West-East gas pipeline. Ensure to start supplying natural gas to HK by the second half of 2012. By the end of the 12th five-year plan, accumulated amount of natural gas supply to HK should reach at least 3 billion cubic meters.

(20) Start a pilot program from 2012 onwards to let some mainland higher education institutions to accept direct admissions from Hong Kong students just according to their examination results of "Hong Kong Secondary School Diploma" (HKSSD), i.e.: benefit HK students by exempting them from the mainland "Higher Education Joint Admissions Examination" (HEJAE).

(21) Integrate Hong Kong technology firms into China 12th five-year plan by reinforcing technology sector cooperation between HK and the mainland China.

(22) Support technology innovation of Hong Kong by establishing "National Engineering Technology Research Centre (HK Branch)" or by setting up high-technology industrial base in HK.

(23) Pilot program that allows Hong Kong services providers to establish their fully owned hospitals is extended to cover all direct-governed cities and provincial capital cities in the mainland China.

(D) Tourism

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(24) Jointly upgrade the quality of tourism services in Hong Kong and the mainland China. Establish policy mechanism for tourism market supervision and work out business creditability of tourism agencies, so as to drive the steady tourism development for the mainland travelers to visit HK.

(25) Drive joint tourism promotion through overseas tourism exhibitions or overseas tourism offices of Hong Kong and the mainland China. Jointly develop new tourism routes based on the policy of "One Travel Several Destinations" in Hong Kong and the mainland China.

(26) Encourage tourism companies of Hong Kong and the mainland China to enter into the market of each other, by enhancing cooperation in tourism technology R&D (Research and Development) and supporting HK tourism agencies to enter into the mainland China market.

(27) Drive joint tourism training program, and support measures for tourism development of Hong Kong Kai Tak International Cruise Terminal.

(E) Guangdong-Hong Kong Cooperation

(28) Ensure implementation of "Cooperation Framework Agreement Between Guangdong and Hong Kong" policy. Drive establishment of "Qianhai Shenzhen-HK Modern Service Industries Cooperation Region" for developing innovative finance, modern logistics, information and other professional services.

(29) Direct measures and implementation of the "Regional Tourism Plan of Guangdong, Hong Kong and Macau" for becoming famous tourism resort destinations.

(30) Connect "transportation between Hong Kong, Macau and the mainland China" to the China 12th five-year integrated transportation system plan. Establish Guangdong-Shenzhen-HK Railway (PRC section) by the end of this year. Expedite development of the "HK-Zhuhai-Macau Cross-Border Bridge". Consider cooperation preferably with Hong Kong enterprises for development areas such as Shenzhen Municipal Yantian Harbour and Shenzhen Special Economic Zone Da Chan Bay Port Container Terminal.

(31) Support aviation sector cooperation between Hong Kong and the Pearl River Delta (PRD) region. Perfect the aviation traffic control mechanism between HK and the mainland China in order to raise capacity for regional aviation transportation.

(32) Actively study the development of "HK-Shenzhen Western Express Rail" for faster connection between Hong Kong and Shenzhen airports.

(33) Permit Hong Kong professionals who acquire construction related qualifications through mutual-recognition program as an equivalent to the construction qualifications of the mainland professionals, to register and to enter into the construction market in the Guangdong Province.

(34) Seek joint-venture cooperation between Hong Kong and the mainland legal firms under the frameworks of "Cooperation Between Guangdong and HK" and "Qianhai Shenzhen-HK Modern Service Industries Cooperation".

(F) Miscellaneous

(35) Pilot program that allows Hong Kong inspection and testing institutions, under the acceptance by the Hong Kong Accreditation Service (HKAS), with the related testing abilities to issue China Compulsory Certification (CCC) mark in Hong Kong is extended to cover to all HK local processing products (previously it covered 4 types of products only) that need CCC accreditation. The CCC Mark, by definition, is a compulsory safety and quality marking for electronic, electrical, and many other types of products sold in the mainland China market.

(36) Support Hong Kong to implement tasks against climate changes and integrate them into the nation-wide task force. Support HK enterprises to develop clean mechanism related projects in the mainland China.

The above 36 new policies, through long-awaited, should be the largest package of favorable measures boosting HK economy since the SARS epidemic in 2003. However, they should not be treated as piece of candy or gift to Hong Kong, because many of them can benefit the mainland China as well. In fact, the new policies are mutually beneficial to both the Hong Kong and the mainland China, and are promoting win-win cooperation for both economies. These new polices can also give HK a clear direction in the next five years to consolidate its leading position and to seize the ever-growing business opportunity in the mainland China.


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