CDB expands RMB business
Updated: 2007-06-30 15:05
The China Development Bank (CDB) has announced that it would issue 5 billion yuan ($657 million) in renminbi bonds in Hong Kong to enhance economic cooperation between the Special Administrative Region (SAR) and the Chinese mainland.
"The issuance of RMB bonds here will strengthen Hong Kong's status as an international financial center," said University of Hong Kong professor Sung Man.
Expanding the use of RMB in Hong Kong would not only give local investors more currency options but also would gradually assist the development of the RMB as a capital instrument, Sung said.
The expansion of renminbi business is only one of a series of supportive measures launched by the central government to assist Hong Kong. Since Hong Kong returned to the motherland in 1997, the SAR and the Chinese mainland enhanced economic and trade cooperation, which helped Hong Kong maintain its prosperity.
During the past 10 years, Hong Kong's economy suffered from a series of challenges, including the Asian financial crisis and the panic surrounding the outbreak of SARS.
Economists in Hong Kong said the central government has taken many measures and given "all-out support" to help the SAR maintain the robustness of its economy throughout troublesome times.
In 2003, the Chinese mainland and Hong Kong signed the Closer Economic Partnership Arrangement (CEPA). The agreement would gradually reduce to nothing tariffs on products manufactured in Hong Kong while expanding market access for Hong Kong services trade to the mainland. It would also boost trade and investment between the mainland and the SAR.
By the end of April, the Chinese mainland had imported $1.3 billion worth of Hong Kong-made products, and 1,753 Hong Kong-based companies have invested in the mainland under the preferential policies drafted into the CEPA.
"The implementation of the CEPA shows the support of the central government," said Chu Man Fai, researcher with the Commercial Economic Research Center of the Hong Kong Polytechnic University.
Like the CEPA, the Individual Visit Scheme, which was implemented in July of 2003, also gave impetus to Hong Kong's economy. At that time, Hong Kong was hit by the SARS epidemic, and the tourism and retail industries were among the most severely affected.
The Individual Visit Scheme was a move by the central government to allow freer visitation of mainland residents from 49 mainland cities to Hong Kong in hopes of reinvigorating tourism in the SAR.
One month after the measure was implemented, Hong Kong's restaurant and catering industry reported a 20 percent increase in business volume on a year-on-year basis. In the first half of 2004, Hong Kong received 10 million tourists from all over the world, including 5.66 million mainland visitors.