CEPA will benefit mainland, HK, Macao and Taiwan economies

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Last updated at: (Beijing Time) Tuesday, December 02, 2003

CEPA will benefit mainland, HK, Macao and Taiwan economies

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The economies of the mainland, Hong Kong, Macao and Taiwan should join hands to capitalize on the opportunities provided by the Closer Economic Partnership Arrangements (CEPA), experts suggested Monday.

Representatives from the Chinese mainland, Hong Kong, Macao and Taiwan agreed on this yesterday at a forum organized by the Hong Kong Junior Chamber to explore CEPA opportunities among the four economies.

"Politicians should not sacrifice the economic benefits enjoyed by their people to achieve their own ambitions," Paul Yip, former adviser to Chief Executive Tung Chee-hwa, proclaimed, referring to the politicians who proposed referendum legislation in Taiwan.

Yip, who is also chairman of the Hong Kong Policy Research Institute and a member of InvestHK, said politicians should set politics aside and focus on economic development.

Despite disagreeing to some extent, Taiwan representative Lin Chien-fu, a professor at the National Taiwan University, concurred with the "economy first" principle, adding that the economies of the Chinese mainland and Taiwan would move closer and closer together in future.

Although the role of CEPA between the mainland and Taiwan is still under discussion, Lin said both economies could benefit from zero tariffs, which could in turn reduce costs.

Deng Hongbo, an economist with the Beijing WTO Affairs Centre, said consumption expenditure on the mainland would also increase as 90 per cent of imports from Hong Kong would enjoy zero tariffs.

The preferential treatment CEPA extends to the signatory regions may have a crowding-out effect on the non-signatory regions. "But as long as the trade volume is increasing, everybody will be satisfied," Lin said.

Hong Kong service providers, such as financial service companies, will also be able to contribute more to the modernization of the mainland banking system, making better use of capital and reducing the number of non-performing loans.

Following the collapse of the multilateral trade talks at the WTO conference in Cancun, certain regions sought to negotiate bilateral trade agreements, such as CEPA, to take advantage of specialization and free trade.

Macao legislative councillor Chui Sai-cheong said a great increase in tourists was recorded in October after the mainland individual-tourist visa scheme was implemented, compared with the same month last year. Macao's GDP growth, which registered 12 per cent in 2001 and 9.5 per cent in 2002, has been strong since its return to the mainland, compared to a negative 4 per cent growth in 1999. He said he expected 9.5 per cent growth rate for 2003.

In terms of trade in services, CEPA allows Hong Kong service providers in 18 areas to enter the mainland market at least one year ahead of their foreign competitors. The arrangement provides a platform for Hong Kong professionals to practise on the mainland and also allows Hong Kong permanent residents to set up individually owned retail stores in Guangdong Province.

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