Mainland, HK enter new phase

The Chinese mainland will further open nonservice sectors to Hong Kong companies, including ship and aircraft manufacturing and resource exploitation industries, under the Closer Economic Partnership Arrangement Investment Agreement, which was signed on Wednesday in Hong Kong.

The two jurisdictions also signed the Agreement on Economic and Technical Cooperation, which promotes cooperation under the CEPA framework in Belt and Road regions, free trade zones and the Guangdong-Hong Kong-Macao Greater Bay Area.

Paul Chan Mo-po, financial secretary of the Hong Kong Special Administrative Region, said the high-level investment agreement is a first for the Chinese mainland. It sets a national standard for access, using a negative-list approach, introducing most-favored treatment and aiming to provide stability and clarity in the investment environment for Hong Kong and the mainland, as well as to protect investors. A negative list names sectors where investment is prohibited; all others are presumed to be open.

The economic and technical cooperation pact encourages collaboration with regions participating in the Belt and Road Initiative - as well as subregional economic and trade cooperation - to enhance links between mainland and Hong Kong companies, and to drive overseas mergers and acquisitions.

Vice-Minister of Commerce Gao Yan said the next step will be the implementation and promotion of the two pacts, adding that the latest supplementary agreements marked a new phase of cooperation between the mainland and Hong Kong.

The investment agreement will take effect at the start of next year and will further open such sectors as financial market investment products, energy and natural resources and the manufacturing of ships and aircraft.

The second agreement the economic and technical pact - took effect on Wednesday. It enhances cooperation in innovation and technology and aims to foster further capital market access.

Salina Yan, Hong Kong's director-general of trade and industry, said there is no timeline for implementation of the proposals.

Chan, the Hong Kong financial secretary, said the CEPA reflects the successful implementation of "one country, two systems", and the newly signed agreement is another milestone of CEPA development.

CEPA was initially launched in June 2003 under the regulations of the World Trade Organization and the Basic Law of Hong Kong. It was created to open the mainland market to Hong Kong. The framework has been in place for 14 years.