Mainland, HK can solidify ties by opening markets

By Zhou Zheng Source:Global Times Published: 2019/6/30 20:38:40

Illustration: Luo Xuan/GT

China and the US agreed to resume trade talks during the G20 summit in Japan, breaking the stalemate between the two countries since May. But as more American politicians adopt a hard-line attitude toward China, it may become harder to reason with the US, which has increasingly given up free trade policies to advocate protectionism. 

But China should not abandon its commitment to further opening its markets. As uncertainties remain in future trade talks, the US may find an opportunity to use Hong Kong as leverage against China. 

With this in mind, the mainland should foster freer flows of talent and capital within the Guangdong-Hong Kong-Macao Greater Bay Area and beyond.

A better policy combination to encourage free movement of talent is essential. According to Hong Kong's Census and Statistics Department, the Special Administrative Region's population has been growing steadily and now stands at nearly 7.5 million. Its unemployment rate, since the beginning of last year, has stayed low at around 2.8 percent. This means that Hong Kong has a healthy, near fully employed labor force. However, it hints at a nearly saturated labor market because future job creation appears slow.

The Greater Bay Area is expected to generate more job opportunities in industries including technological innovation, financial services, professional services and logistics. The Funding Scheme for Youth Internships on the Mainland - a program that provides internships on the mainland enabling young people from Hong Kong to gain experience in a working environment and get to know the working culture - has sponsored 149 internship projects in the 2019-20 year.

The funding scheme is expected to benefit 3,800 youngsters from Hong Kong. Programs like this serve as a good start in helping the youth from Hong Kong to tap into mainland industries and prepare for the job market in the Greater Bay Area.

The mainland should further drop the complicated procedures required to obtain a residence permit, allowing more people from Hong Kong, especially young people, to gain access to job opportunities in the vast mainland market. Since September last year, residents from Hong Kong, Macao and Taiwan are able to apply for new mainland ID cards if they have lived on the Chinese mainland for six months. It is a step in the right direction. The new card allows them to enjoy more public facilities and services including the convenience of their children going to school and being able to buy houses.

Another imperative issue is the free movement of capital. Investment from Hong Kong, Macao and Taiwan is treated as foreign investment. This situation needs to change.

The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) was intended to foster economic integration and development of both mainland and Hong Kong in the areas of trade, investment and technology cooperation. The trade in goods and services facilitation has come a long way, but investment liberation still has a way to go.

The mainland and Hong Kong signed an agreement on investment at the end of June in 2017, committing to enhancing the CEPA. The new investment agreement, which took effect at the beginning of 2018, promised to give Hong Kong national treatment in all non-service sectors except 26 measures.

As the blueprint of the Greater Bay Area was rolled out earlier this year the investment agreement can further bolster the boom in the region.

Under the background of the trade war, Hong Kong, the financial hub rated as the world's freest economy and one of the economic pillars of the Greater Bay Area, has more potential to cooperate with the mainland.

Hong Kong investors set up 39,868 companies on the mainland last year, a 120.68 percent increase from the previous year. The actualized investment from Hong Kong was $89.92 billion, taking up 66.6 percent of total actualized foreign investment.

Despite the current efforts, the mainland needs to carry on this trend to land more infrastructure projects such as the Hong Kong Railway Express Link, lift policy barriers and build financial facilitation, making talent and investors from Hong Kong, Macao and Taiwan more attracted to opportunities in the Greater Bay Area and other regions in the mainland.

Only when Hong Kong and the mainland enjoy freer movement of talent and capital can the two sides promote mutually beneficial cooperation.

The author is a reporter with the Global Times.

Posted in: INSIDER'S EYE

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