Beijing-HK Economic Cooperation Opens New Chapter

A fresh chapter in cooperation between Beijing and the Hong Kong Special Administrative Region (HKSAR) is set to open with the establishment of a new mechanism for promoting bilateral cooperation and determination of focused fields of cooperation.

The meeting on September 2 between Liu Qi, secretary of the Beijing Municipal Committee of the Communist Party of China, and Hong Kong Chief Executive Tung Chee Hwa, the first ever "summit" meeting of the two cities, indicated the significance attached by the two governments to Beijing-Hong Kong economic cooperation.

During the eighth Beijing-Hong Kong Economic Co-operation Symposium (September 2-3, 2004), the two sides decided to implement a new mechanism for strengthening bilateral ties. It was agreed to convene Beijing-Hong Kong economic cooperation conferences irregularly in Beijing and Hong Kong by turns when necessary.

Special liaison offices will also be opened in the two cities to facilitate daily communications between the two governments.

Beijing-Hong Kong trade and economic cooperation have received fresh impetus and reached a higher level thanks to preparations for the 2008 Beijing Olympic Games, implementation of the Chinese mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) and Hong Kong's economic recovery,.

Liu Jingmin, vice mayor of Beijing, said at a press conference held in Hong Kong on August 31, that with the end of the Athens Olympic Games, Beijing has entered a new phase of its preparation for the Beijing 2008 Olympic Games and the next four years will be the most essential period for the preparation.

Liu pledged that domestic and overseas investors would be treated equally in their bidding for all Olympic Games-related projects. He said Hong Kong investors and Hong Kong-based foreign companies were especially welcome.

Beijing presented a total of 130 major projects, including infrastructure, education, culture, sports, commerce and tourism.

Lu Hao, visiting Beijing vice-mayor, said Beijing has a similar economic structure with Hong Kong, although it is in a different development phase. Lu said the two cities can complement each other's respective advantages.

The service sector is Hong Kong's pillar industry and it also accounts for 61 percent of Beijing's GDP. The central government and Hong Kong signed CEPA II last month. According to the new agreement, 11 Chinese-mainland service sectors will open wider to Hong Kong companies, and another eight sectors will open to Hong Kong companies for the first time.

Encouraged by the implementation of CEPA since the beginning of this year, Hong Kong investment in Beijing's service sectors has increased. In the first five months this year, 47 CEPA-related Hong Kong enterprises settled in Beijing, with a contracted investment of US$100 million. They included the first Hong Kong solely owned advertising company, travel service and cinema company in Beijing.

Tung Chee Hwa stressed that the importance of Beijing-Hong Kong economic cooperation has gone beyond the two cities themselves. Their fruitful bilateral cooperation may become a dynamic force for pushing ahead with the development of Bohai Sea-rim economic region and the Pearl River Delta Region.

Recruitment fair offers 335 senior posts

Besides attracting investment, the capital city went headhunting for more than 300 high-paid posts at the symposium, said Zhang Zude, vice-director of the Beijing Personnel Bureau.

The most eye-catching posts came from the Beijing Development and Reform Commission, which invited overseas professionals into it's the capital city's government for the first time.

The commission aims to hire three senior economic specialists with an annual salary of 500,000 yuan (US$60,500), said Zhang Zude.

Zhang said the "government employees" were different from civil servants, who usually work for the government for their entire working life.

"They will sign contracts with the government to fulfill certain projects, providing consultation and technical support while carrying out administrative functions," said Zhang.

The annual salaries of most of the posts were over US$19,000, and BOE Technology Group Company, based in Beijing's Chaoyang District advertised for a chief technology officer with an annual salary of US$180,000.

A logistics supervisor in a clothing company applied for a job with a Beijing auto-parts enterprise at the fair. He was granted an interview in Beijing at the end of the month.

"I know I won't be paid the same amount of money as I earn in Hong Kong, and the difference can be up to 50 per cent," he told China Daily. "But I believe the career development prospect is much greater in Beijing... the automobile industry is booming in China."

Lily Jiang Changyun, who has lived in Hong Kong for two years, came to the fair to look for employment opportunities in Beijing.

An architecture graduate from Tsinghua University, she has recently completed a Master's degree at the University of Hong Kong.

She said she studied in Hong Kong in order to gain more experience because the city was a more international city.

"But there are a lot more job opportunities in Beijing, with the Beijing Olympic Games in 2008 and Shanghai World Expo in 2010. As for the salary, I hope to earn 10,000 yuan per month. That is what my former classmates are earning," she said.

Macao trade links

The Chinese mainland and Macao are set to sign an expanded version of the Closer Economic Partnership Arrangement (CEPA), says a senior official reported by China Daily on September 9.

"The two sides are negotiating over the deal, and we are going to sign the agreement very soon," said Ma Xiuhong, vice-minister of commerce, without giving a specific timetable.

The deal, widely called CEPA Phase II, will be similar to that signed by the central government with the HKSAR late in August, Ma told a seminar at the Eighth China International Fair of Investment and Trade in Xiamen, Fujian Province.

The first phase of CEPA was implemented on January 1, 2004.

Under the second phase, tariffs will be eliminated on 529 goods currently being produced by Hong Kong manufacturers. Another 184 products currently not made in Hong Kong will be included, so that interested companies might discover their potential and start making them.

At present, 374 products fall under the zero-tariff regime.

Hong Kong businesspeople will enjoy more opportunities as the mainland grants preferential treatment to Hong Kong companies in eight more industries, including patent and trademark agencies, airport services, entertainment, information technology, job agencies and certification.

Moreover, greater access into 11 out of 18 mainland service sectors, already subject to preferential treatment under the first phase of CEPA, will be made available to Hong Kong investors.

They include accounting, medical and legal services.

The green light has also been given for Hong Kong companies to sell books, newspapers, magazines, medicine, and agricultural chemicals in the mainland. Hong Kong companies will also be allowed to build and operate cinemas on the mainland. Hong Kong business people will be allowed to set up their own companies to sell oil products, both retail and wholesale.

When the new CEPA is in place, small and medium-sized enterprises in Hong Kong and Macao are expected to get more benefits. They are the target beneficiaries of CEPA but have not enjoyed the free-trade deal very much, said Hua Xiaohong, a leading scholar of the region's economy at the University of International Business and Economics in Beijing.

The second phase of CEPA comes as the grace period of China's accession to the World Trade Organization (WTO) draws to a close in November, which means that restrictions for foreign investment in most sectors will be lifted and import duties will continue to be lessened.

It is against this backdrop that the central government is considering granting Hong Kong and Macao more preferential policies.

Commenting on the effect of the CEPA, Philip Yung, deputy secretary of the Commerce, Industry and Technology Bureau of Hong Kong, said the pact contributed in part to Hong Kong's economic growth of the first half of the year.

"Hong Kong's gross domestic product jumped 6.8 per cent and 12.1 per cent in the first and second quarters respectively," Yung said. "CEPA plays a big role."

From January to May, a total of US$42.3 million worth of Hong Kong duty-free goods entered the mainland, according to official data.

Up to August, the mainland has approved 446 Service Suppliers Certificates to Hong Kong and Macao investors.

The certification is given to qualified Hong Kong and Macao companies which are eligible to enjoy favourable treatment under the CEPA.

A number of Hong Kong and Macao investors have increased their presence on the mainland markets as the CEPA has given them a priority in setting up wholly-owned enterprises in certain sectors.