America has more influence in China with
an outstretched hand than with a clenched fist.
We have a chance, not a certainty, but a chance to strengthen our prosperity
and our security and to see China become a more open society. It's more
about building a world in which human beings have more freedom, more
control over their lives and more contact with others than ever before.
- US President Bill Clinton after the PNTR vote, September 19, 2000
China's WTO membership will benefit Hong Kong, Asia and the global economy. It will bring both opportunities and challenges to Hong Kong. We believe that Hong Kong will stand to benefit substantially from the new business opportunities. - HKSAR Chief Executive, Mr Tung Chee Hwa, welcoming the PNTR decision, September 20, 2000
After the US Congress passed a bill to grant Permanent Normal Trade Relations (PNTR) status to China, US President Bill Clinton signed the bill into law on October 10, 2000.
The granting of PNTR status was a milestone in China's long campaign to enter the world trade body. It removed one of the last obstacles to China's WTO accession and will have a significant impact on the development of Hong Kong's economy.
Hong Kong stands to benefit greatly from a more open and transparent
Mainland market. Hong Kong will face increased competition from other
international businesses for a slice of the lucrative Mainland trade
and investment pie. But, at the same time, the pie will get much bigger.
Following China's accession to the WTO, it is estimated that:
Foreign Direct Investment inflows will increase from the current level of about US$40 billion to as much as US$100 billion annually by 2005
Trade flows will increase from the present level of US$474
billion to US$600 billion
by 2005
Hong Kong will be able to leverage its existing strengths and contacts to capitalise on the significant opportunities that will emerge in China over the next few decades.
Hong Kong's existing business links - as well as the bonds of culture and language - are an enormous resource for overseas companies, especially small and medium enterprises, wishing to do business in China.
Many opportunities in the Mainland's domestic market will come not only from the prosperous coastal regions and big cities like Guangzhou, Beijing and Shanghai, but from the developing inner and western provinces where the Mainland government is intent on developing the next high-growth areas.
Hong Kong companies are already the largest external investors in all of the Mainland's provinces and autonomous regions.
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Hong Kong's strong business links
in the Mainland |
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Hong Kong is the most important entrepot of China, handling about 40% of the Mainland's foreign trade. |
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Hong Kong is the largest external investor in the Mainland, accounting for about half - or US$171 billion - of all realised direct investment in China. |
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About 5 million people are employed in neighbouring Guangdong Province by more than 40 000 companies wholly or partly-owned by Hong Kong enterprises. |
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More than 150 000 Hong Kong people work in the Mainland, mostly as managers or professionals. |
Those who invest in the west can make big money. – Premier Zhu Rongji, reported remarks to members of the HKSAR Delegation in Beijing, May 24, 2001
China's western region has become a new focus of economic growth following the success of the open-door policy over the past 20 years in boosting prosperity in the coastal areas of the Mainland.
Under the 'Go West' campaign, the Central Government has intensified efforts to accelerate development and prosperity in the western region, which includes 12 provinces, autonomous regions and a municipality and covers an area of about 6.78 million square kilometres, or 70% of the country. It has a population of 358 million - about 30% of the 1.26 billion people living in China.
China's accession to the WTO will provide additional impetus and opportunities for international companies to further explore trade and investment opportunities in the western region.
On May 20, 2001, the Chief Secretary for Administration, Mr Donald Tsang, led a 280-member delegation to the western region. It was by far Hong Kong's biggest trade and business delegation to the Mainland, or any other location.
The 10-day visit took in Xian (Shaanxi), Beijing, Chengdu (Sichuan) and Urumqi (Xinjiang). In Beijing, officials from eight other western provinces and autonomous regions, as well as the municipality of Chongqing, briefed the delegation on the investment environment and business opportunities in their areas.
The Hong Kong delegation included leading industrialists and entrepreneurs, professionals, government officials, representatives of quasi-governmental organisations and members of the media.
The mission's key objectives were to:
Enable Hong Kong's business sector to better understand the business opportunities and the market potential arising from the development of the western region
Promote Hong Kong's advantages and foster closer links with the western region
Enable Hong Kong people and the business sector to better understand the Mainland's vast resources as well as its overall development potential.
Hong Kong companies and entrepreneurs have always been fast to seize investment and business opportunities in the Mainland. The HKSAR Delegation to the Western Region saw and obtained first-hand information on how best to capture opportunities in the region and plan their corporate strategies in the future.
At long last, after almost 30 years of hard work by all sectors of the society, we are here today to witness the commencement of the Mandatory Provident Fund System ... Retirement protection is no longer a benefit for the fortunate few. It is now a right, enshrined in the law, of all members of the three million-plus workforce. - Mandatory Provident Fund Schemes Authority chairman, Mr Charles Lee, December 1, 2000
The Mandatory Provident Fund (MPF) system, a compulsory retirement protection scheme, was implemented on December 1, 2000.
By the end of May 2001, 85% of employers, 93% of relevant employees and 90% of self-employed persons had enrolled in MPF schemes.
Under the system, all employees aged between 18 and 65 (unless exempt) contribute 5% of their monthly wage, up to a maximum of HK$1,000 (US$128). Their contribution is matched by the employer. The privately-managed MPF System will initially inject up to HK$10 billion (US$1.28 billion) into the financial markets, rising to HK$60 billion (US$7.7 billion) annually by 2030.
These large pools of funds will add greater depth to Hong Kong's financial services sector and have a positive affect on bond and securities markets.
MPF Funds will also lead to the creation of a pool of capital that will enable new companies to raise capital through equity listings.
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