Trade in services
The Central and Hong Kong governments jointly announced on 13 December 2011 the latest service liberalisation measures under Supplement VIII to CEPA, the ninth phase of the CEPA package that will be implemented in April 2012. A total of 23 liberalisation measures spanning 16 service sectors (further divided into 13 existing sectors and three new sectors) are provided under Supplement VIII to CEPA. With Supplement VIII, the total number of service sectors agreed under CEPA will increase from 44 that are currently in force to 47. When Supplement VIII is implemented next April, the total number of service liberalisation measures will have gone up to more than 300.
Of interest to note is that many liberalisations incorporated within Supplement VIII to CEPA were actually touched upon by Vice Premier Li Keqiang in his three-day visit to Hong Kong in August 2011. Aside from unfolding a package of 36 measures, the vice premier indicated that the trade in services between the Chinese mainland and Hong Kong should be basically free by the end of the 12th Five-year plan in 2015. This is perhaps one of the clearest indications regarding how soon and how far the mainland market will eventually open up for Hong Kong service suppliers and professionals, who could then expect progressive liberalisation in concerned service sectors over the next few years, until national treatment will basically have been accorded.
Regarding Supplement VIII to CEPA, the Chinese mainland has specifically granted relaxed market access conditions in the 16 service sectors as follows: (i) Legal services, (ii) construction services, (iii) research & development services, (iv) technical testing, analysis and product testing, (v) manufacturing services, (vi) job intermediary services, (vii) distribution, (viii) insurance services, (ix) banking services, (x) securities services, (xi) medical services, (xii) tourism, (xiii) recreational, cultural and sporting services, (xiv) road transport services, (xv) professional qualification examinations, (xvi) individually owned stores.
To cope with the fallout of the international financial crisis, Hong Kong has advocated since 2009 the development of six new industries in which Hong Kong enjoys clear advantages, namely education services, medical services, testing and certification services, environmental industries, innovation and technology, and cultural and creative industries. CEPA, in both Supplements VIII and VII, has incorporated measures geared to assisting Hong Kong service suppliers (HKSS) to gain enhanced access to the mainland market (more detailed discussion can be found in subsequent sections).
Guangdong and Hong Kong have striven hard to foster a closer economic relationship as a result of their geographic proximity and strong business ties. As the immediate hinterland of Hong Kong, Guangdong thrives in its symbiotic economic relationship with Hong Kong. In addition to being a manufacturing stronghold for Hong Kong companies, Guangdong is increasingly seen as a potent market for Hong Kong products and services.
The Central government, in its release of the Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020) (The “Outline”) in December 2008, specifically elevated Guangdong/Hong Kong cooperation to the national policy level.1 Against this background, governments of the two places signed the Framework Agreement on Hong Kong and Guangdong Co operation (“Framework Agreement”) in April 2010, with a view to translating the macro policies set out in the Outline. Importantly, in the 12th Five-year Plan released by the Central government in March 2011, there was a dedicated chapter on Hong Kong with strong emphasis on deepening cooperation between Guangdong and Hong Kong and the implementation of the Framework Agreement, advocating the use of CEPA’s pilot implementation measures in further liberalising the PRD and cooperating with Hong Kong.
Therefore, Guangdong’s early and pilot implementation measures (先行先試) continue to be a key feature of the latest CEPA package. There are a total of seven liberalisation measures for pilot implementation in Guangdong under Supplement VIII, focussing on the construction, distribution and insurance sectors (see respective measures in subsequent sections).
1 China’s National Development and Reform Commission announced in December 2008 the Outline of the Plan for the Reform and Development of the Pearl River Delta (2008-2020) (http://en.ndrc.gov.cn/policyrelease/P020090120342179907030.doc).