Chief Executive of Hong Kong SAR Donald Tsang (right) and Chief Executive of Macao SAR Chui Sai-on (left) applaud at the opening ceremony of the Third Session of the 11th National People's Congress in Beijing Friday. Ren Chenming / China News Service

Central government likely to allow launch of more yuan products

The central government will continue to support Hong Kong's efforts to strengthen its status as an international financial center, said Premier Wen Jiabao Friday at the opening of the annual session of the National People's Congress.

"(The central government) supports Hong Kong's efforts to consolidate and boost its status as an international financial, trading and shipping center," said the Premier.

Wen also said the central government supports Hong Kong's new initiatives to develop industries that enjoy competitive advantages, and to create new drivers for economic growth.

"The motherland always serves as a strong shield for Hong Kong and Macao," the Premier said.

Chief Executive Donald Tsang, who was also in Beijing, told media that the central government fully supports Hong Kong's strategy to promote its traditional pillar industries, and develop six priority economic areas.

Tsang said he is pleased to learn Premier Wen Jiabao has expressed his full support for Hong Kong's economic development strategy in his annual work report.

Tsang also held an unofficial meeting with Vice-premier Wang Qishan, who is responsible for economic affairs. "Vice-premier Wang Qishan told me that Hong Kong's status as an international financial center is irreplaceable," Tsang said.

Vice-premier Wang told Tsang that the central government will gradually implement pilot programs for national financial reforms, said Tsang, who held a discussion with the vice-premier on the sidelines of the national congress.

Neither Premier Wen nor Chief Executive Tsang elaborated on the measures the central government intends to implement to boost Hong Kong's status as an international financial center.

But economists believe the most likely measures to be implemented in the near term will be aimed at fast-tracking the city drive to become an offshore yuan hub.

The central government will most likely allow Hong Kong to launch more yuan products, said Daniel Chan, a senior investment strategist at DBS Bank.

"Yuan products will make Hong Kong unique, because other regional financial centers do not have such products," he said.

The Hong Kong government has recently unveiled new initiatives and incentives, including accommodative regulations, land policies, financial incentives and human resource plans, to nurture six new industries, namely, testing and certification, medical services, innovation and technology, culture and creative industries, environmental industry and education services.

The aim is to broaden the city's economic structure, which is currently dominated by four pillar industries - financial services, trading and logistics, tourism, and producer and professional services, which together account for about 60 percent of GDP and nearly half of the total workforce.

Donald Tsang said the Premier's remark indicates the central government's approval of Hong Kong's efforts to develop new industries.

He added that the central government will provide necessary support through the mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).

CEPA is a free trade agreement between the two sides that allows easier access to mainland markets for Hong Kong-made products, and Hong Kong-based service companies.

China Daily

(HK Edition 03/06/2010 page2)