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A new agreement was signed by Chinese mainland authorities and the Hong Kong Special Administrative Region (HK SAR)on Thursday. Building on previous phases of the Closer Economic Partnership Agreement (CEPA) signed in 2003, local media describes the new deal as a gift from the central government to Hong Kong.

The new measures, announced at the Mainland, Hong Kong & Macao Trade & Economic Cooperation Forum in Hong Kong, will grant the HK SAR greater access to the mainland market in 10 areas starting next year, and will include legal services, construction-related consulting, tourism and air transport.

In addition, there are specific agreements relating to information technology, conventions and exhibitions, audiovisual products, distribution, road transport and individually owned stores.

Announcing the details, Hong Kong Chief Executive Donald Tsang said the mainland will waive import tariffs on a broader range of Hong Kong goods from Saturday including aquatic, electronics and food products.

Jia Qinglin, the visiting top political adviser to the central government, told the forum that implementation of the new measures would be sure to generate greater economic development in the three regions.

He said the central government is also considering widening renminbi business in the two SARs to boost their roles as important regional and global financial hubs.

Tsang said that the policies could include the issue of yuan bonds on a trial basis. The mainland also plans to allow Hong Kong businesses to use renminbi to settle transactions, such as for imports from the mainland.

"No matter what happens, the great motherland will always be there to uphold the prosperity and stability of Hong Kong and Macao," pledged Jia, chairman of the National Committee of the Chinese People's Political Consultative Conference.

Highlighting CEPA's role, Tsang said it has helped Hong Kong recover strongly from the economic downturn following the Asian financial crisis in 1998 and the outbreak of the SARS (severe acute respiratory syndrome) epidemic in 2003.

"We estimate that in the first two years of its implementation, CEPA created 29,000 jobs, and generated HK$5.4 billion (US$701 million) in services receipts and HK$5.5 billion (US$714 million) in capital investment for Hong Kong," he said.

Chan Wai-kwan, senior director of business policy at the Hong Kong General Chamber of Commerce, said increased market access would definitely help companies expand their business in the mainland market.

Since the signing of the CEPA on June 29, 2003, the two sides have been working closely to broaden the scope and coverage of the arrangement. Agreements on further liberalization under the second and third phases of CEPA were reached in 2004 and last year.

All the liberalization measures also apply to Macao, with minor differences due to its different economic structure.

(China Daily June 30, 2006)