The Chinese central government and the government of the Hong Kong Special Administrative Region (HKSAR) signed in Hong Kong today Supplement IV to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA), aiming to further open the mainland market to Hong Kong.

The agreement was signed by Henry Tang, secretary of Finance of HKSAR government, and Vice Minister of Commerce Liao Xiaoqi, witnessed by HKSAR Chief Executive Donald Tsang and Minister of Commerce Bo Xilai.

Welcoming the agreement, Tang said that it will provide further and broader opportunities for Hong Kong business and reinforce Hong Kong's comparative advantages in better tapping the potential of the mainland market.

Under Supplement IV to the CEPA, the mainland will open 11 new service areas to Hong Kong, including sports, environment and public utilities. The mainland has already opened 27 areas to Hong Kong, and the agreement promised further access to these areas such as banking, securities, tourism and insurance.

In banking, the minimum total asset requirement for a Hong Kong bank acquiring a shareholding in a mainland bank will be lowered from 10 billion U.S. dollars to 6 billion U.S. dollars.

Both sides will enhance cooperation in establishing green lanes for Hong Kong banks to set up branches in mainland, and encouraging mainland banks to set up subsidiary operations in Hong Kong.

In tourism, the minimum annual business turnover required of a Hong Kong travel enterprise setting up joint venture and wholly owned enterprises on the mainland will be reduced to 8 million U.S. dollars and 15 million U.S. dollars, respectively.

Hong Kong travel agencies in Hunan, Hainan, Fujian, Jiangxi,Yunnan, Guizhou and Sichuan provinces and Guangxi Zhuang Autonomous Region will be allowed to apply for the operation of group tours to Hong Kong and Macao for the permanent residents in these provinces and autonomous region, an extension of similar arrangement already in place in Guangdong on a pilot basis.

In relation to conventions and exhibitions, Hong Kong services suppliers will be allowed to organize exhibitions in Guangdong and Shanghai through cross-border supply on a pilot basis.

In addition, Hong Kong enterprises established in Guangdong and Shanghai will be allowed to organize overseas exhibitions for mainland enterprises in these areas. The mainland will also support Hong Kong in attracting and organizing large-scale international conventions and exhibitions.

The required capital investment required of Hong Kong services suppliers for setting up equity or contractual joint-venture medical institutions on the mainland will be lowered from 20 million yuan (about 2.6 million U.S. dollars) to 10 million yuan (1.3 million dollars).

All the service liberalization measures will come into force on Jan. 1, 2008. The mainland will work out and promulgate the necessary implementation rules and regulations as appropriate.

CEPA was signed in 2003. Under CEPA, the mainland has agreed to give all products of Hong Kong origin tariff free treatment if they meet the CEPA rules of origin. On trade in services, the mainland has already allowed preferential treatment to Hong Kong services suppliers in 27 services.

Latest figures from the HKSAR government indicated that between 2004 and 2006, CEPA generated 36,000 new jobs for Hong Kong residents and induced 5.1 billion HK dollars additional capital investment in Hong Kong.

CEPA also created 16,000 new jobs for mainlanders and attracted 9.2 billion HK dollars additional capital investment by Hong Kong companies on the mainland.

"The implementation outcomes indicate that CEPA is a mutually beneficial arrangement, allowing Hong Kong to explore the vast mainland market while assisting the mainland in integrating with the world economy," said Henry Tang, the secretary of Finance.