Analysis: China's WTO Accession Brings HK Opportunities, Challenges

Home>>Business

Last updated at: (Beijing Time) Thursday, November 22, 2001

Analysis: China's WTO Accession Brings HK Opportunities, Challenges

Hong Kong Secretary for Commerce and Industry told the Legislative Council Wednesday that China's accession to the WTO is estimated to raise Hong Kong's mainland-related export volume and GDP. China's WTO accession brings HK many oppotunities as well as challenges.

GDP & Export Volume to Raise

Hong Kong Secretary for Commerce and Industry Chau Tak Hay told the Legislative Council Wednesday that China's accession to the WTO is estimated to raise Hong Kong's mainland-related export volume by an additional 15 percent by 2010, an average of 1.3 percent yearly.

During the same period, Hong Kong's GDP is expected to grow by an additional 5.5 percent, an average of 0.5 percent every year, Chau noted.

More Opportunities to Arise

Most of macro economists here believed that China's WTO accession will bring Hong Kong both business opportunities and challenges.

As for business opportunities arising from China's WTO membership, the economists noted that Hong Kong will definitely benefit from the further opening up of the mainland market as its third largest trading partner and the financial and services hub in the Asia-Pacific region.

Analysts on China's economy here also believed that as the overall trading environment is concerned, China will enjoy the "most-favoured-nation" status. Its external trading environment will be governed by the framework of WTO rules, thus significantly reducing the risk of unilateral trade sanctions imposed upon it by other countries, they held.

"This will in turn create a more stable trading environment for Hong Kong," Chau stressed. In addition, the WTO membership will also bring about a more transparent, predictable as well as rule-based market in the mainland and enable Hong Kong businesses to operate under more stable conditions, Chau added.

Financial experts pointed out that the mainland's relaxation of its restrictions over entry to its services sector and domestic distribution market after its accession will create huge room for development of Hong Kong's enterprises.

With many unique advantages, such as the rule of law, a low taxrate, a clean government, a solid financial system, the free flow of capital and information, and a wealth of knowledge about the mainland and international markets, Hong Kong will be able to contribute to the further development of the mainland and, in the process, find new impetus of growth for its own economy, they reassured.

Further Challenge Facing Enterprises

However, many of the observers here believed China's WTO membership also poses certain challenges to Hong Kong. They noted that as the mainland establishes more direct links with other economic entities in the rest of the world, Hong Kong firms will need to provide services and products of a higher quality to maintain its gateway position.

They also warned that a further challenge facing most small and medium-sized enterprises in Hong Kong is the relatively high market entry thresholds for some of the services sectors.

Hong Kong's Economy

Hong Kong Special Administrative Region of the People's Republic of China is firmly committed to an open market policy. This policy applies to all trade, as well as to all investments in Hong Kong.

Hong Kong has excellent communications and supporting services, is strategically located and enjoys an established and stable legal system. The Sino-British Joint Declaration on Hong Kong and the Basic Law of the Hong Kong Special Administrative Region ensure that its importance as a regional centre will extend well beyond 1997. They guarantee continuation of Hong Kong's existing capitalist economic and trade systems, the free movement of goods and capital, and its status as a free port and separate customs territory, with its own customs border. They also provide that the Hong Kong Special Administrative Region may participate in relevant international organizations and international trade agreements.

Sources from: http://www.hketo.org.sg/fact/ft-hkecon.htm

Medium-Long Outlook of HK Economy Remains Sound, Financial Secretary

Feature: HK Strives for Stronger Int'l Bond Market

HK Plays Key Role in Mainland's Financial Development: Official