HKMB Hong Kong Means Business

Hong Kong Means Business Hong Kong Means Business
  • Login / Register

Languages

  • EN
  • 繁
  • 简
  • Events
  • My Feed
  • Contact HKTDC
  • Subscribe
  • Subscribe

Section Menu

  • multimedia
  • market spotlight
  • first person
  • Venture Hong Kong
  • heads-up
  • inside china
  • life & style
  • hktdc research

Languages

  • EN
  • 繁
  • 简
  • HKTDC.com |
  • About HKTDC |
  • My HKTDC |
  • Login / Register |

HKTDC.com About HKTDC My HKTDC

Login Register

Hong Kong Means Business

Section Menu

  • multimedia
  • market spotlight
  • first person
  • Venture Hong Kong
  • heads-up
  • inside china
  • life & style
  • hktdc research

https://hkmb.hktdc.com/en/1X09VR6L

hktdc research
SAVE FOR LATER
SHARE / SEND

"Scan QR Code" in WeChat and tap "..." to share.

CEPA Supplement X: new moves towards freer trade with the Chinese mainland

03 January 2014


Since the announcement of the Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) in June 2003, the past decade has seen both the central and Hong Kong governments jointly announce additional liberalisation measures each year by way of adding a new Supplement to CEPA. In late August of 2013, both sides agreed on the latest package under Supplement X to CEPA, with the bilateral agreement scheduled for implementation in January 2014. Undoubtedly, CEPA and its 10 Supplements have formed an important framework for economic cooperation between the mainland and Hong Kong.

Thanks to CEPA, thousands of Hong Kong service suppliers (HKSS) have been able to set up shop on the mainland with market access terms that are more favourable than otherwise accorded to foreign investors generally pursuant to WTO provisions. Remarkably, Hong Kong has established itself to be the largest offshore Rmb centre with a clear first-mover advantage, with about 200 banks having introduced Rmb businesses, and Rmb deposits of more than Rmb780 billion. In addition, Hong Kong banks have established many subsidiaries, branches and sub-branches on the mainland, including more than 50 sub-branches set up in Guangdong Province, in accordance with CEPA’s cross location sub-branching provisions. Another impressive development is that since 2004 more than 120 million mainland tourists have visited Hong Kong as individual travellers as a result of the Individual Visitor Scheme (IVS), and they accounted for 67% of Hong Kong’s inbound mainland tourists in the first 10 months of 2013.

According to an estimate released in 2010, the Hong Kong government indicated that about half of the Hong Kong companies issued with HKSS certificates had established business operations on the mainland. Thus far, the top three HKSS certificate applicants come from the sectors of transport and logistics, distribution services and air transportation services, which account for about 60% of the approved total; and the percentage of such HKSS having established business operations on the mainland should be higher than the overall average.

Hong Kong service supplier certificate (Phase 1 to 11) as of Nov 2013

Service Sector

No. of applications received

No. of applications
approved

Transport and logistics services

643

636

Distribution services

272

266

Air transport services

168

165

Advertising services

134

127

Printing services

109

106

Placement and supply services of personnel

100

97

Construction professional services and related engineering services

81

76

Audio-visual services

57

56

Value-added telecommunications services

52

47

Management consulting and related services

46

38

Tourism and travel related services

34

33

Real estate services

28

27

Legal services

21

20

Medical and dental services

20

20

Computer and related services and information technology services

17

17

Cultural services (excluding audio-visual services)

16

16

Convention and exhibition services

15

15

All insurance and insurance-related services

14

14

Trademark agency services

11

11

Banking and other financial services (excluding insurance and securities)

10

10

Securities and futures services

10

10

Others

21

20

Total

1,879

1,827

New moves towards freer trade with the mainland

Under CEPA Supplement X, 65 liberalisation service measures to widen and deepen the access of HKSS to the mainland market have been added, spanning 30 sectors, including 10 Guangdong pilot measures (contained in sectors highlighted in yellow in the table below). Together with the two newly open sectors of “duplicating services” and “after-death facilities services” under Supplement X, the mainland has increased the total number of liberalised service sectors under CEPA from 48 to 50, with the cumulative number of service liberalisation measures rising to 403.

Service sectors benefitting from CEPA (Phase 1 to 11)

Accounting

Individually owned stores

Professional qualification examinations

Advertising

Insurance

Public utility

After-death facilities services#

Inter-disciplinary research and experimental development service

Rail Transport

Air transport*

Placement and supply services of personnel *~

Road transport*~

Audio-visual*

Legal*~

Research and development

Banking*

Logistics

Scientific and technical consulting services

Building cleaning*

Management consulting

Securities*~

Computer and related services*

Market research*

Services related to management consulting and project management

Construction and real estate*

Medical and dental *

Social services for elderly and disabled*~

Conventions and exhibitions

Manufacturing services

Recreational, cultural and sporting services (including library/museum services)*

Cultural entertainment*

Maritime transport*~

Storage and warehousing

Distribution*

Mining services

Technical testing, analysis and product testing*~

Duplicating#

Other business services

Telecommunications*~

Education services

Patent agency

Tourism*

Environmental*

Photographic*

Trade mark agency *

Freight forwarding agency*

Printing*

Translation and interpretation*

* Existing service sectors with liberalisation under Supplement X to CEPA
~ Guangdong pilot and implementation measures under Supplement X to CEPA
# New service sectors under Supplement X to CEPA

There are many “bright spots” in Supplement X, for example the permission to allow HKSS to establish fully-licensed joint-venture securities companies with majority ownership; along with the mainland’s undertaking to seriously study the mutual recognition of investment funds between the two places (please see the article on CEPA Supplement X and Hong Kong’s financial and distribution services sectors; and the breakthrough in permitting secondment of mainland lawyers to the Guangdong-based representative offices of Hong Kong law firms as consultants to advise on mainland law (see the article on CEPA Supplement X and Hong Kong’s professional services sector).

Another remarkable feature of CEPA Supplement X is the inclusion of a large number of liberalisation measures that allow HKSS to provide services in the mode of natural person movements, as seen in basically all sectors covered by Supplement X, with the exception of legal, banking, securities, fund management, market research, trade mark agency and personnel placement services.

Free trade with the mainland and Guangdong Province

In addition to providing business opportunities to Hong Kong companies and people on the mainland over the past decade, CEPA has been an important framework for economic cooperation between Hong Kong and the mainland, also cementing cordial cooperation with Guangdong. The Central government indicated as early as 2011 that it wanted to achieve basically free trade in services between the mainland and Hong Kong by the end of the 12th Five Year Plan period in 2015. This was then followed by a pledge from the Guangdong government in 2012 that the province would strive for basically free trade in services with Hong Kong by the end of 2014. It is not surprising to find Supplement X containing by far the largest number of service liberalisation measures considering the approaching targets to achieve basically free trade in services with either Guangdong or the mainland as a whole.

In retrospect, China was committed to liberalising 100 service sectors according to WTO classification upon its accession to the WTO in late 2001. When CEPA was first announced in June 2003, the mainland offered further liberalisation measures to Hong Kong, making CEPA WTO-plus not only a fact in the sectors covered, but also to the extent of liberalisation in the concerned service sectors. Currently, more than 90% of the 160 WTO service sectors are already open to Hong Kong under the CEPA framework, and it could be envisaged that the mainland will continue to open up WTO sectors relevant to Hong Kong in the lead up to 2015.

Nonetheless, the notion of achieving basically free trade between Hong Kong and the mainland is best seen in the context of national treatment being granted to HKSS in the service sectors already opened up by the mainland. Meanwhile, more than half of those WTO sectors are now completely open to Hong Kong, with HKSS granted national treatment accordingly, in particular the transportation and logistics sectors. Yet, with many service sectors remaining partially open, it will take further liberalisation measures, especially on the part of Guangdong, to accelerate the achievement of basically free trade in services with Hong Kong.

Keenly aware of the need to promote the early achievement of liberalisation of trade in services between Hong Kong and the province, the Guangdong government has drawn up an Outline Plan, as well as an Action Plan, relating to trade in services, while it has also released the Opinions on Accelerating the Development of Trade in Services, under which Guangdong is committed to progressively dismantling barriers to trade in services with Hong Kong, and supporting HKSS’ cross-border establishment of a commercial presence in the province.

A total of 10 service liberalisation measures for pilot implementation in Guangdong under Supplement X have been introduced, following the 17 measures introduced previously under Supplement IX. With Supplement X, the total number of Guangdong measures open to HKSS has risen to about 70, as the new package is implemented in 2014.

CEPA liberalisation and Guangdong measures

CEPA Supplement

No. of liberalisation measures in service sectors

No. of Guangdong service measures

No. of Qianhai measures

X

65

10

0

IX

37

17

5

VIII

23

7

0

VII

27

7

0

VI

29

8

0

V

29

16

0

IV

40

4

0

As Supplement IX incorporated five pilot measures specifically linked to Qianhai, a designated exemplary zone for the modern services industry, and innovative cooperation between Guangdong and Hong Kong, it may appear odd that, initially, Supplement X contains not a single Qianhai measure.

While Qianhai attached great importance to the adoption of pioneering liberalisation measures in Guangdong, one should not look beyond Guangdong’s announcement of the Opinions on Accelerating the Development of Qianhai in August 2013 to identify the provincial government’s continued commitment to reinforce the liberalisation drive in Qianhai, now an integral part of Guangdong’s overall economic reform. Apart from being given greater economic management authority, Qianhai will adopt 36 measures related to services liberalisation, enhancing the business environment and human resources provision. This comes on top of the 22 Qianhai measures adopted in 2012, announced in parallel to the release of Supplement IX to CEPA in August 2012.

While CEPA may not be the only arrangement with which service market reforms for foreign investment are introduced in Guangdong, Hong Kong companies look set to find emerging service market opportunities in Qianhai and other parts of Guangdong given the province’s emphasis on pilot implementation measures in achieving basically free trade with Hong Kong.

Guangdong-Hong Kong cooperation on CEPA and Guangdong Free Trade Zones

Following the 2013 Policy Address, Hong Kong formed a CEPA Joint Working Group with Guangdong, with the first meeting held recently to discuss matters relating to Guangdong’s CEPA implementation. The Working Group followed the cooperation agreement signed between the Hong Kong and Guangdong governments in September 2012 to expedite the early realisation of basic liberalisation of services trade between the two places.[i]

Meanwhile, it has been reported that Guangdong intends to develop free trade zones involving both Hong Kong and Macau, with Qianhai, Hengqin and Zhuhai expected to be candidates to host the new FTZs, following the launch of the Shanghai Pilot Free Trade Zone in August 2013. While realisation of those Guangdong FTZs may await Central government authorisation, Guangdong is expected to keep unveiling new measures to attract business and investment to expedite market reforms. Meanwhile, Guangdong is undergoing pilot reforms of the administrative approval system in cities such as Shenzhen, Dongguan and Zhuhai, rolling forward the business registration system.

Whether Guangdong will launch its FTZs involving Hong Kong shortly remains to be seen, but CEPA will undisputedly continue to be an important framework for Hong Kong to enhance economic cooperation with the mainland, in particular Guangdong, with pilot implementation measures. As such, new liberalisation measures adopted in 2014, which are the largest number of CEPA measures for any Supplement, mark a clear and important step towards achieving basically free trade in services between Hong Kong and the mainland or Guangdong.


[i] Co-operation Agreement between Hong Kong and Guangdong on Jointly Promoting Early Realisation of Basic Liberalisation of Trade in Services

BACK TO TOP ^
CONTENT PROVIDED BY
    Topics:
  • Mainland China,
  • Hong Kong,
  • cepa,
  • free trade,
  • hkss,
  • liberalisation,
  • pilot implementation,
  • service supplier,
  • supplement
  • Mainland China
  • Hong Kong
  • Mainland China
  • Hong Kong
Home

Article Topics

ARTICLE TOPICS

MAINLAND CHINA35608
HONG KONG36027
CEPA98903
FREE TRADE82075
HKSS82064

ARTICLE TOPICS

MAINLAND CHINA35608
HONG KONG36027
CEPA98903
FREE TRADE82075
HKSS82064
LIBERALISATION82076
PILOT IMPLEMENTATION82058
SERVICE SUPPLIER82060
SUPPLEMENT82077

interest_article

YOU MAY BE INTERESTED IN

11 November 2020

Capitalising on China-ASEAN FTA Treatment to Explore Mainland Market

19 October 2020

Navigating Covid-19: A Game Developer

04 June 2020

China Further Opens Testing and Accreditation Business to Hong Kong under CEPA

25 May 2020

CEPA Grants Hong Kong and Macao Engineers Wider Access to Mainland Market from 1 June

Related Events

RELATED EVENTS

26 - 30 July 2022

Style Hong Kong Pavilion at China International Consumer Products Expo, Haikou

2 - 4 September 2022

Chic HK, Shenzhen

7 - 10 December 2022

Marintec China 2022 – HK Pavilion

7 - 9 December 2022

SIAL Shanghai 2022
FIND AN EVENT

Social Share

FOLLOW US

GET WEEKLY UPDATES

newpaper-img

GET OUR WEEKLY EMAIL UPDATES

banner-img


I acknowledge that the above information may be used by the Hong Kong Trade Development Council (HKTDC) for incorporation in all or any of its database for direct marketing or business matching purpose (and may therefore become available to the public within and/or outside of Hong Kong for use by them), and for any other purposes as stated in the Privacy Policy Statement; I confirm that I have the consent and the authority of each individual named in this form to release their personal data for the purposes stated herein.


*For non-EU/EEA customers, please skip this box which is solely for EU/EEA customers as required by the relevant data protection law in the EU.

THANK YOU

Thank you for registering.

SHARE THIS STORY

EMAIL
LINKEDIN
WeChat
FACEBOOK
TWITTER
WHATSAPP

ID: HKTDCofficial

Don't have an account?

Create An Account

successfully added on your preferences.