CEPA to Give HK New Competitive Edge

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Last updated at: (Beijing Time) Saturday, July 26, 2003

CEPA to Give HK New Competitive Edge

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The Central Government of China has agreed to give preference to Hong Kong - "when the time is ripe" - to consider liberalization in market access in respect of offshore renminbi financial business, Chief Executive of the Hong Kong Special Administrative Region Tung Chee Hwa said Friday.

Speaking to the media after visiting the Hong Kong Houseware Fair and Hong Kong Gifts & Premium Fair at the Convention and Exhibition Center Friday afternoon, Tung Chee Hwa said officials of Chinese mainland have also agreed to consider allowing banks inHong Kong to trial run personal renminbi business, including deposits, remittance, exchange and credit-card business.

"The signing of CEPA will give impetus to our economic restructuring and sharpen our competitive edge," Tung said, referring to the newly signed Closer Economic Partnership Arrangement between Hong Kong and the mainland.

After Tung's announcement, the Hong Kong Monetary Authority (HKMA) expressed its welcome to the news.

Such initiatives would be of benefit both to Hong Kong's development as an international financial center and to the growing economic integration between Hong Kong and the mainland, said HKMA Chief Executive Joseph Yam.

"The HKMA has for some time been in discussion with its mainland counterparts on the possibility of facilitating renminbi deposits in Hong Kong banks," Yam said. "The fact that the CentralGovernment is now giving active consideration to allowing trial runs in this area is very encouraging news."

Yam added that, since the proposal was still at a preliminary stage, the exact details of the trial runs would need to be workedout once the decision to proceed had been taken. "We look forward to working with the mainland authorities and with the banks of Hong Kong on this project in due course."

He said that the further agreement of the Central Government togive preference to Hong Kong when considering liberalization in market access in respect of offshore renminbi business was also good news for Hong Kong.

"Obviously, this is a matter for consideration by the Central Government at a future date, when such liberalization becomes a reality," Yam said. "However, the agreement to give preference to Hong Kong is a very positive reinforcement of Hong Kong's status as an international financial center."

In addition, Tung also announced that the Central Government has agreed to support mainland enterprises that meet requirements to make public offers of securities and to list in Hong Kong.

It will also consider further relaxing the 15 percent ratio of Hong Kong insurance companies holding shares in mainland insurancecompanies.

On the tourism front, "the Central Government has agreed to my request to add Beijing and Shanghai to the list of cities to be opened up," said Tung.

"These are all major breakthroughs for us in Hong Kong," he said. "We must not miss these new opportunities. We should take these opportunities and run with them," he added.

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