Deepen CEPA, Promote Regional Economic and Trade Cooperation
--Speech at the 4th Pan-Pearl River Delta Regional Cooperation and Development Forum
Liao Xiaoqi, Vice Minister of Commerce
June 9, 2007 Changsha, Hunan
Distinguished guests, ladies and gentlemen,
It gives me a great pleasure to attend the fourth Pan-Pearl River Delta Regional Cooperation and Development Forum, and discuss the coordinated development in the Pan-Pearl River Delta region with all the leaders, guests and friends present here. This forum serves as an important measure to implement the scientific outlook of development, realize the economic interaction between the eastern, central and western regions, and improve the economic and trade cooperation level between the mainland and Hong Kong and Macao. Hereby, on behalf of the Ministry of Commerce I would like to extend warm congratulations to the convening of this forum!
In 2006, the mainland completed the transitional period after the WTO accession, and further improved the level of opening up. Since China joined the WTO 5 years ago, the mainland has honored the commitments and obligations in a comprehensive manner: it has reduced the tariff level from 15.3% to 9.8%, straightened out and revised about 3,000 laws, regulations and departmental rules, and opened more than 100 services trade sectors including banking, insurance and securities to foreign capital, which makes it the developing economy with the most open market. The improved opening-up level has promoted the commercial development of the mainland. In 2006, the foreign trade of the mainland continued to expand, with import and export volume totaling at 1.76 trillion USD, up by 23.8% and ranking No.3 in the world. Foreign investment inflow increased steadily, with the actual attracted FDI standing at 63 billion USD, up by 4.5%. The “Going Global” pace has accelerated, with the overseas investment reaching 16.1 billion USD, up by 32%. Foreign project contracting and labor service cooperation has also developed rapidly. The total retail sales of consumer products in the flourishing mainland market registered at 7.6 trillion yuan, increasing by 13.7%. All in all, the commercial work makes a good start in the 11th Five Year Program period.
In 2006, the economic and trade exchange between the mainland and Hong Kong and Macao developed fast, and the implementation of CEPA was quite smooth. In 2006, the total trade volume between the mainland and Hong Kong and Macao reached 168.6 billion USD, accounting for 9.6% of the total foreign trade of the mainland; The mainland absorbed 20.8 billion USD FDI from Hong Kong and Macao, or 33.1% of the total FDI inflow, and made 3.45 billion USD direct investment in Hong Kong and Macao, occupying 21.4% of the total overseas investment of China. Still the most important trading partners, biggest foreign investment sources and destinations of the mainland, Hong Kong and Macao continue to play an important role as the showcase of opening up in the mainland. The constant development of economic and trade ties between the mainland and Hong Kong and Macao is attributable to the smooth implementation of CEPA. According to CEPA, on trade in goods, the mainland has adopted zero tariff for all the products with a Hong Kong or Macao origin since January 1, 2006; on trade in services, the mainland has eased the market access of service providers from Hong Kong and Macao in 27 sectors including finance and logistics; on trade investment facilitation, the mainland has launched active cooperation in 8 areas including trade and investment promotion with Hong Kong and Macao. By the end of April, 2007, the mainland had accumulatively imported 1 b USD worth of zero-tariff products from Hong Kong and Macao, with total exempted duties of over 700 million RMB; 2,079 enterprises from Hong Kong and Macao had invested in the mainland based on the preferential terms of CEPA; Residents from Hong Kong and Macao had also set up 2,746 private businesses in the mainland with more than 7,000 employees. Besides, the financial and tourist cooperation, and the mutual recognition of professional qualification between the mainland and Hong Kong and Macao under the framework of CEPA have also achieved positive progress. At present, the RMB business in Hong Kong and Macao is conducted in an orderly way, with the total RMB savings standing at 26 billion yuan. There has been a rapid increase in the number of mainland companies listed in Hong Kong, whose total capitalization accounted for one half of the total market capitalization of the Hong Kong stock exchange. Mainland tourists have shown great interest in individual traveling to Hong Kong and Macao, with the total number reaching 37.5 million person/times. Steady progress has been scored in the mutual recognition of professional qualifications, as evidenced by the obtaining of professional qualifications through such mechanism by more than 1400 people in the field of construction.
Trade and economic cooperation in the Pan-Pearl River Delta yielded outstanding achievements in 2006. As is known to all, the 9 mainland provinces/autonomous regions in the Pan-Pearl River Delta account for one fifth of the nation’s total land area and one third of the population and economic aggregate, and play a vital role in the economic development of Mainland China. In 2006, the import and export volume of the 9 mainland provinces/autonomous regions totaled 631.8 billion USD, accounting for 36% of that of the mainland, and their actual utilization of foreign investment reached 18.4 billion USD, accounting for 30% of that of the mainland. As the world’s most open economy, Hong Kong has further consolidated its role as an international financial, trading and transportation center. Enabled by rapid economic development, Macao is growing to be a platform for trade and economic exchanges between the mainland and the EU and Portuguese speaking countries. Since the launching of Pan-Pearl River Delta cooperation in 2004, a number of strategic programs have been put forward, including the Outline of the Development Program for Pan-Pearl River Delta Cooperation (2005-2020). Trade and economic cooperation within the region have been lighted with many successes, including, in particular, a robust development momentum in the cooperation between the 9 mainland provinces/autonomous regions and Hong Kong and Macao. In 2006, the 9 mainland provinces/autonomous regions saw a trade of 121.5 billion USD with Hong Kong and Macao, taking up 72% of the trade volume between the mainland and Hong Kong and Macao, an investment inflow from Hong Kong and Macao of 7.2 billion USD, accounting for 35% of the total inflow from Hong Kong and Macao to the mainland, and 40% of the overall foreign investment inflow into the region. It is gratifying to see that with the concerted efforts of the governments of the 9 mainland provinces/autonomous regions and Hong Kong and Macao, a regional cooperation mechanism has come into shape, two big platforms, namely the Pan-Pearl River Delta Regional Cooperation and Development Forum and Pan-Pearl River Delta Regional Economic and Trade Co-operation Fair, have been established, and a sound basis has been laid for future development with economic and trade cooperation within the region growing in its strength, extensiveness and quality.
Ladies and Gentlemen,
An open and vigorous mainland economy has grown to be and will remain a major engine for world economic development. Since 1978, the mainland has been furthering its reform and opening up, and actively participating in economic globalization, which has been rewarded with remarkable achievements. Our GDP increased from 216.5 billion USD in the early days of reform and opening up to 2.6 trillion USD in 2006, which can be translated into an average annual growth rate of 9.6%, and an increase of world ranking from the 15th to the 4th. Our GDP per capita has reached 2000 USD, and the livelihoods of the people have been noticeably improved. Although the GDP of the mainland accounts for only less than 5% of the global total, its contribution to global economic development exceeds 10%. With a foreign trade of less than 7% of the world’s total, it contributes 12% of the growth in global trade. Reform and opening up has introduced a lot of advanced technology, talents, capital and advanced management expertise as well as international competition mechanism, international rules and international standards into the mainland, and promoted the emancipation of people’s mind and the renewing of their mindset. In this new era, China will adhere firmly to the basic national policy of reform and opening up, continue to promote a mutually beneficial and open strategy, engage further in economic globalization, and take a more pro-active stance on integration with the world.
The vigorous development of regional economic cooperation has brought about new opportunities for the Pan-Pearl River Delta. Currently, with the further development of economic globalization, regional economic cooperation has become a new trend, and bilateral free trade areas and regional cooperation organization have been growing in number. According to WTO statistics, more than 340 regional economic cooperation agreements have been signed worldwide. The mainland has paid great attention to regional economic cooperation and promoting two-way mutually beneficial opening-up. In recent years, the mainland has signed agreements on trade in goods and services with ASEAN countries. China-Pakistan and China-Chile FTA have been signed and taken effect. FTA talks with New Zealand, Australia, Gulf Cooperation Council, Singapore and Iceland are ongoing very well. The 9 FTAs, which include those established and those in the talks, involve 27 countries and regions, covering 1/4 of mainland’s total foreign trade. In particular, CEPA, as the most liberalized FTA signed and implemented by the mainland, is to be enriched and deepened in accordance with the needs of the three parties. This year marks the 10th anniversary of Hong Kong’s return to the mainland. MOFCOM, together with other relevant agencies, is discussing with SAR government and is to sign new complementary agreement on further liberalizing the mainland’s market for Hong Kong and Macao. Some policies and measures, which are not suitable to be adopted nationwide at this stage, will be piloted in the Pan-Pearl River Delta area.
In this context, I think Pan-Pearl River Delta area should seize the opportunity and strengthen its cooperation mechanism, so as to enhance its competitiveness and take the lead in development. Hereby, I’d like to propose the following 3 observations for strengthening trade and economic cooperation in the Pan-Pearl River Delta area:
First, to further improve the market operation mechanism of the mainland provinces and autonomous regions in the Pan-Pearl River Delta area. Mainland provinces and autonomous regions in the Pan-Pearl River Delta area shall strengthen coordination, promote a fair and open regional market system and set up a complementary industrial coordination mechanism, so as to build the brand name of Pan-Pearl River Delta area cooperation, enhance the overall international competitiveness and influence of the region and achieve the interaction among and coordinated development and common prosperity of the eastern, the central and the western areas. With the release of a series of macro-regulatory polices, such as the “two taxes merge into one”, adjustment of processing trade policies, the nine provinces shall make full use of the geographical advantages, put into place national macro-regulatory polices, such as guiding processing trade to gradually shift to the central and western areas, and strike a balance between the overall interest of the region and local interests, so as to coordinate the regional development with more scientific concepts and in more effective ways.
Second, to fully implement all the measures of CEPA, and to continuously lift the cooperation level between the 9 mainland provinces and autonomous regions and Hong Kong and Macao SARs. The significance of CEPA lies in removing institutional obstacles between the mainland and Hong Kong and Macao, and enhancing the free flow of production means so as to facilitate economic interaction and integration. The 11th Five-Year Program has clearly stated that cooperation and interaction in economy and trade between the mainland and Hong Kong and Macao should be strengthened via continued CEPA implementation to sustain the central role of Hong Kong in international finance, trade and maritime transport and bolster the moderate economic development in a diversified fashion. I hope that the 9 mainland provinces and autonomous regions can sum up attentively the successful experiences and problems in the economic and trade cooperation among the 3 parties and thoroughly implement all the measures of CEPA. I also hope the business communities in Hong Kong and Macao can make full use of the CEPA policies to progressively lift the cooperation level in terms of trade, two-way investment and industrial development within the SARs, and bring the Pan-Pearl River Delta regional cooperation into depth.
Third, to complement one another with the advantages each possesses, and to bring the Pan-Pearl River Delta region into international competition. The 9 mainland provinces and autonomous regions have a vast hinterland. Situated at the crossroads between the mainland and ASEAN nations, they have access to the ASEAN nations in terms of geographical location, people and economy, and affluent markets, science and technology and human resources. Hong Kong and Macao are broadly linked to the international community, and equipped with relatively complete legal system, sophisticated infrastructure and sound business climate. Particularly, Hong Kong, as the hub of international finance, trade and maritime transport, and Macao, as the platform connecting the Portuguese-speaking countries and EU, are well-placed to explore into the international markets. Therefore, all parties in the Pan-Pearl River Delta region should leverage on your comparative edges, present the investment climate and business opportunities in the region, and jointly participate in international competition to add attractiveness and competitiveness to the region’s economy.
Ladies and gentlemen,
Looking into the future, there is a broad prospect for economic and trade cooperation in the Pan-Pearl River Delta region. I hope all parties in the region can make use of the forum as a platform to improve the regional cooperation mechanism and the sound and rapid economic development.
In conclusion, I wish the forum a complete success!
Thank you!
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