China's accession into the World Trade Organization (WTO) will re-define Hong Kong's role of a manufacturing control center and a business services hub, not just a gateway, said Hong Kong chief economist on January 20.

The remarks, made by Edward Leung, chief economist of the Trade Development Council (TDC) of Hong Kong, accompanied the release Thursday of a TDC research report on China's WTO accession and the implications for Hong Kong.

He emphasized that the imminent accession of China into the WTO will once again provide a favorable environment for Hong Kong's economic advancement.

"Improved access to and from China re-defines Hong Kong's future role as not just a gateway but an international metropolitan center, contributing to the continual modernization of the country with its global networks and services oriented economy, " said Leung.

He said: "The expansion in China's trade and investment activities with the rest of the world should benefit Hong Kong as a hub. Through providing more value-added and focused services, Hong Kong's excellent skills in trading, transportation, financial services and professional and business services will play a more active, not diminished, role."

The TDC report said that Hong Kong's exports, especially exports of services, will expand more rapidly. Its trade with the Chinese mainland is conservatively estimated to increase by an extra four to six percent by 2005.

Income generated from investment and labor in the mainland will also rise. Involvement in the mainland's services market will trigger off the next wave of Hong Kong's investment and professional participation in the mainland. As a result, they are expected to generate a much greater contribution, in income terms, to Hong Kong's GNP than that can be captured in its GDP, said the report.

Unprecedented opportunities as well as new challenges are being posed to manufacturers in the textile and clothing, auto parts and IT equipment industries in terms of Hong Kong's manufacturing activities in the Chinese mainland.

The report said these will stem from the abolition of quotas on textiles and clothing in 2005, substantial tariff reductions of China's imports of cars and auto-parts, the availability of auto-finance in the Chinese mainland, as well as zero-tariffs on IT related parts, components and products imports.

The report also highlighted the opportunities and obstacles ahead for Hong Kong companies in different services sectors.