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Boundless Potential: Beijing–Hong Kong Cooperation Progresses

China's reform and opening up policies of the past 20 years have unleashed the unbounded economic cooperation potential that exists between Beijing and the Hong Kong Special Administrative Region.

This relationship was been greatly expanded under the Closer Economic Partnership Agreement (CEPA), signed by Chinese Premier Wen Jiabao June 29, 2003, and Hong Kong-invested enterprises in Beijing have made great contributions to the social and economic development of China's capital city ever since.

By the end of 2004, foreign-invested enterprises from Hong Kong had established 7,750 investment properties in Beijing, accounting for 34.4 percent of all foreign-invested enterprises in the capital. Contracted foreign investment from Hong Kong totalled US$13.94 billion (about 112.9 billion yuan), accounting for 32.1 percent of all foreign investment. Foreign capital from Hong Kong actually used amounted to US$6.63 billion (about 53.7 billion yuan), accounting for 28.7 percent of total used foreign capital. Hong Kong ranks first among all external entities, countries or cities with investments in Beijing, in terms three indexes: the number of foreign-invested enterprises, contracted foreign investment and used foreign capital. Hong Kong's investment in Beijing will continue to steadily increase. From January to September 2005, Hong Kong established 305 foreign-invested enterprises in Beijing, an increase of 14.7 percent over 2004; contracted foreign investment was valued at US$990 million (about 8 million yuan), an increase of 20.7 percent over 2004. Used foreign investment amounted to US$470 million (about 3.81 billion yuan), an increase of 20.5 percent over 2004.

Investment received from Hong Kong from January to September 2005 bore the following traits:

* Investment in the manufacturing field increased greatly and its investment share expanded steadily. Contracted foreign investment from Hong Kong in the manufacturing field was valued at US$270 million (about 2.19 billion yuan), with an increase of 54.3 percent over the same period in 2004, accounting for 17.8 percent of the total foreign investment in the manufacturing field and 27.4 percent of the total contracted foreign investment from Hong Kong. Investment from Hong Kong that flowed into manufacturing was mainly concentrated in communications equipment, computer and other advanced electronic-equipment manufacturing industries, accounting for 45.2 percent of the total from Hong Kong in the manufacturing field. Investment in general and that of specialized equipment manufacturing industries accounted for another 7.6 percent of total investment from Hong Kong in the manufacturing industry.

* Investment in the service field was still mainly concentrated in rental, leasing and commercial-service industries, information transmission, computer services and the software and real estate industries. From January to September 2005, the investment from Hong Kong in rental and leasing and in the commercial service industry amounted to US$150 million (about 1.22 billion yuan), with a slight increase over the same period in 2004, accounting for 21 percent of the total investment from Hong Kong in the third industry and 9.8 percent of industrial investment in general. Contracted foreign investment used in the information transmission, computer services and software industries amounted to US$130 million (about 1.05 billion yuan), accounting for 18.2 percent of total investment from Hong Kong reported in the third industry and 28.7 percent of total investment in industry as a whole. Contracted foreign investment in the real estate industry was US$110 million (about 891 million yuan), with a remarkable increase over the same period in 2004, accounting for 15.8 percent of all contracted investment from Hong Kong in the third industry and 21.9 percent of the total contracted foreign investment in industry in general.

* Large-scale projects also increased. From January to September 2005, there were more than 57 large-scale Hong Kong-invested projects worth more than US$10 million, 11 more than during the same period in 2004, accounting for 29.5 percent of all projects valued at more than US$10 million in Beijing.

In the foreign trade field, during the first 8 months of 2005, exports from Beijing to Hong Kong markedly increased, and Hong Kong became Beijing's biggest export market. According to Beijing Customs District of China data, from January to August 2005, the export volume from Beijing to Hong Kong amounted to US$1.94 billion, increasing by 1.5 times and accounting for 10 percent of Beijing's total export volume. Within this export volume, US$1.5 billion was contributed by local enterprises of Beijing, an increase of 1.6 times that accounted for 14.7 percent of the total export volume of the local enterprises of Beijing. Hong Kong ranked first among all entities, countries or areas to which Beijing has exports.

The Ninth Beijing-Hong Kong Symposium on Economic Cooperation will be held at the end of November 2005, based on a theme of furthering economic cooperation in high- and new-tech industries, retail, dining and beverages, Olympic investments, tourism and other fields. Other topics of interest will be the exploitation of communications possibilities, cooperation in city construction and management, the cultural industry and other new fields. The event will also promote an expansion in the range of cooperation between Beijing and Hong Kong.