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6 Special Report on the State of Business in South China
6. Hong Kong Special Administrative Region
East Asia’s Logistics and Financial Hub To enhance cooperation between Hong Kong and Mainland
China in the services sector, the Chinese central government and
Situated at the southeastern tip of China, Hong Kong is at the government of the Hong Kong Special Administrative Re-
the center of East Asia. Since its return to the Chinese Mainland gion signed the “Tenth Supplement to the Mainland and Hong
in 1997, the special administrative region has been a model for Kong Closer Economic Partnership Arrangement” (CEPA) on
the success of the “One Country, Two Systems” policy. Hong August 29, 2013, which takes effect on January 1, 2014.
Kong is the world’s 10th largest trading economy, 6th biggest for-
eign exchange market and, with its service sector accounting for The Tenth Supplement further relaxes the market access
more than 90 percent of GDP, the world’s most service-oriented conditions in 28 existing sectors, namely:
economy, according to the Hong Kong Development and Trade
Council. Legal Distribution
Construction Environment
Hong Kong encompasses Hong Kong Island, the Kowloon Computer and related services Banking
Peninsula and the New Territories. Parts of the region consist of Real estate Securities
the most densely populated places in the world, while others are Market research Hospital services
quite rural. Approximately 88 percent of the population speaks Technical testing & analysis Social services
Cantonese as their first language, rather than the mainland’s of- services Tourism
ficial language of Mandarin Chinese. Placement and supply services Cultural
of personnel Sporting
Economy Building-cleaning Maritime transport
Photographic Air transport
Major economic sectors of Hong Kong include: trade and Printing Road transport
logistics, tourism, financial services, professional services and Convention and exhibition Freight forwarding
other producer services. Mainland China is Hong Kong’s larg- Translation and interpretation agency
est trading partner and the largest source of external direct in- services Trademark agency
vestment into Hong Kong. Its relationship covers a wide range Telecommunications
of activities ranging from traditional areas such as imports/ Audiovisual
exports, wholesale and retail, banking and transport and ware-
housing, to newer areas such as real estate, hotels, financial ser- Furthermore, under the Circular, service providers of Hong
vices, manufacturing and infrastructure development. Kong and Macao are permitted to establish wholly-invested en-
tertainment places in the pilot areas of Qianhai, Shenzhen and
Spotlight on CEPA’s Tenth Supplement Hengqin, Zhuhai.
In December 2001, after China’s accession to the WTO,
Hong Kong’s savvy global business environment has paired
Hong Kong proposed an arrangement with mainland China well with the PRD’s competitive manufacturing base. Accord-
similar to a free trade agreement. By 2002, the official term, ing to China Customs’ statistics, Hong Kong is the country’s
Closer Economic Partnership Arrangement (CEPA), was con- second largest trading partner after the United States. In 2014,
firmed. CEPA promotes closer integration and development of mainland imports from Hong Kong amounted to RMB79.2
the PRD through trade in goods and services, investment facili- billion, while exports to Hong Kong were RMB2230.7 billion .
tation and tourism.
Hong Kong overtook London and New York to claim the
The basic objectives of CEPA are to phase out tariffs and top spot in the 2011 World Economic Forum Financial De-
non-tariff barriers on trade in commodities, liberalize trade in velopment Index, marking 2011 as the first year an Asian city
services and reduce and eliminate all discriminatory measures has topped the rankings. The World Economic Forum is based
to boost trade and investment in the Greater PRD. For manu- on several financial indicators, including financial access, busi-
facturing industries, CEPA allows the vast majority of manu- ness environment, banking and financial services, transparency,
factured goods that meet Hong Kong rule of origin and CEPA institutional environment, non-banking financial services and
specifications into the Chinese mainland duty-free. In the ser- financial markets. Hong Kong is consecutively ranked as the
vice sector, CEPA gives Hong Kong companies in specified sec- world’s freest economy by the Wall Street Journal and Heritage
tors preferential access to markets. Foundation.
70
6. Hong Kong Special Administrative Region
East Asia’s Logistics and Financial Hub To enhance cooperation between Hong Kong and Mainland
China in the services sector, the Chinese central government and
Situated at the southeastern tip of China, Hong Kong is at the government of the Hong Kong Special Administrative Re-
the center of East Asia. Since its return to the Chinese Mainland gion signed the “Tenth Supplement to the Mainland and Hong
in 1997, the special administrative region has been a model for Kong Closer Economic Partnership Arrangement” (CEPA) on
the success of the “One Country, Two Systems” policy. Hong August 29, 2013, which takes effect on January 1, 2014.
Kong is the world’s 10th largest trading economy, 6th biggest for-
eign exchange market and, with its service sector accounting for The Tenth Supplement further relaxes the market access
more than 90 percent of GDP, the world’s most service-oriented conditions in 28 existing sectors, namely:
economy, according to the Hong Kong Development and Trade
Council. Legal Distribution
Construction Environment
Hong Kong encompasses Hong Kong Island, the Kowloon Computer and related services Banking
Peninsula and the New Territories. Parts of the region consist of Real estate Securities
the most densely populated places in the world, while others are Market research Hospital services
quite rural. Approximately 88 percent of the population speaks Technical testing & analysis Social services
Cantonese as their first language, rather than the mainland’s of- services Tourism
ficial language of Mandarin Chinese. Placement and supply services Cultural
of personnel Sporting
Economy Building-cleaning Maritime transport
Photographic Air transport
Major economic sectors of Hong Kong include: trade and Printing Road transport
logistics, tourism, financial services, professional services and Convention and exhibition Freight forwarding
other producer services. Mainland China is Hong Kong’s larg- Translation and interpretation agency
est trading partner and the largest source of external direct in- services Trademark agency
vestment into Hong Kong. Its relationship covers a wide range Telecommunications
of activities ranging from traditional areas such as imports/ Audiovisual
exports, wholesale and retail, banking and transport and ware-
housing, to newer areas such as real estate, hotels, financial ser- Furthermore, under the Circular, service providers of Hong
vices, manufacturing and infrastructure development. Kong and Macao are permitted to establish wholly-invested en-
tertainment places in the pilot areas of Qianhai, Shenzhen and
Spotlight on CEPA’s Tenth Supplement Hengqin, Zhuhai.
In December 2001, after China’s accession to the WTO,
Hong Kong’s savvy global business environment has paired
Hong Kong proposed an arrangement with mainland China well with the PRD’s competitive manufacturing base. Accord-
similar to a free trade agreement. By 2002, the official term, ing to China Customs’ statistics, Hong Kong is the country’s
Closer Economic Partnership Arrangement (CEPA), was con- second largest trading partner after the United States. In 2014,
firmed. CEPA promotes closer integration and development of mainland imports from Hong Kong amounted to RMB79.2
the PRD through trade in goods and services, investment facili- billion, while exports to Hong Kong were RMB2230.7 billion .
tation and tourism.
Hong Kong overtook London and New York to claim the
The basic objectives of CEPA are to phase out tariffs and top spot in the 2011 World Economic Forum Financial De-
non-tariff barriers on trade in commodities, liberalize trade in velopment Index, marking 2011 as the first year an Asian city
services and reduce and eliminate all discriminatory measures has topped the rankings. The World Economic Forum is based
to boost trade and investment in the Greater PRD. For manu- on several financial indicators, including financial access, busi-
facturing industries, CEPA allows the vast majority of manu- ness environment, banking and financial services, transparency,
factured goods that meet Hong Kong rule of origin and CEPA institutional environment, non-banking financial services and
specifications into the Chinese mainland duty-free. In the ser- financial markets. Hong Kong is consecutively ranked as the
vice sector, CEPA gives Hong Kong companies in specified sec- world’s freest economy by the Wall Street Journal and Heritage
tors preferential access to markets. Foundation.
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