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In 1995, two years before China resumed its sovereignty over Hong Kong, Fortune magazine carried a cover story, prophesying the special administrative region's downfall after its return to China.
That prophecy has not come true as Hong Kong has continued to go from strength to strength. One of the main reasons for this is the central government has extended vigorous support to Hong Kong Special Administrative Region.
The central government has taken a series of measures to sustain Hong Kong's economic prosperity and stability since July 1, 1997. During the 1998 Asian financial crisis, Hong Kong's financial system suffered from international financial speculation. While adhering to the policy of not depreciating the yuan, the central government extended strong support to Hong Kong for its intervention in the market to battle international speculative capital that was preying on the Hong Kong dollar.
When Hong Kong's economy suffered a recession and its number of unemployed drastically increased following the outbreak of SARS, severe acute respiratory syndrome, in 2003, the mainland signed the Closer Economic Partnership Arrangement with Hong Kong, an accord that covers trade, finance, services, tourism and other fields. The pact has facilitated the free flow of capital, goods and personnel between the Chinese mainland and Hong Kong. In particular, the relaxation of restrictions on individuals from some mainland cities visiting Hong Kong has played a crucial role in boosting the recovery of Hong Kong's tourism, retail and hotel sectors, which has added confidence to its economic recovery and development and helped it fully recover from the negative effects of the Asian financial crisis and SARS.
In the latter half of 2008, following the onset of the global financial crisis, Hong Kong's exports declined steeply, its domestic demand seriously contracted and unemployment rocketed. Its GDP declined 2.5 percent year-on-year in the fourth quarter of that year. To help Hong Kong counter the economic slowdown, the central government implemented a series of financial and economic cooperation measures on Dec 19, 2008 to help the special administrative region overcome the crisis and consolidate its status as an international financial center.
The central government has also given substantive support for the development of Hong Kong's financial sector. As part of these efforts, concrete policies and measures have been introduced to encourage mainland enterprises to list on the Hong Kong Stock Exchange and for the special administrative region to become an offshore center fro the yuan. Nearly 700 mainland enterprises are now listed on the Hong Kong Stock Exchange, 45.8 percent of the total number of listed companies, with a market value of HK$11.87 trillion ($1.53 trillion), 58.7 percent of the total market value of Hong Kong-listed companies. From January to April, the yuan-denominated settlement of the mainland's cross-border trade via Hong Kong's banks amounted to 748.30 billion yuan ($117.59 billion), 96.4 percent of China's yuan-denominated cross-border trade settlement during the same period. By the end of April, Hong Kong's yuan-denominated savings had reached 552 billion yuan and loans reached 122 billion yuan.
The level of the mainland's opening to Hong Kong's financial sector has also continuously been raised. For example, policies and measures have been taken to allow Hong Kong's banks to establish business subsidiaries in neighboring Guangdong province. Hong Kong's insurance companies have also been encouraged to set up business agencies in the mainland. All these policies and measures have promoted Hong Kong's financial development and prosperity.
A lot of practical measures have also been taken to help Hong Kong stabilize prices and improve local people's livelihoods. The mainland has long offered Hong Kong fair-price supplies of foods, drinking water and energy. Statistics show that more than 90 percent of Hong Kong's pigs, cows, fish, livestock and vegetables come from inland regions. The endless supply of food from the mainland has helped stabilize prices in Hong Kong. Under the strict management of the Ministry of Commerce and the General Administration of Quality Supervision, Inspection and Quarantine, the mainland's quality departments have maintained strict supervision over Hong Kong-bound foods.
Practical measures have also been taken to push for Hong Kong-mainland economic integration to expand Hong Kong's economic development space. In a move to construct an unblocked modern logistical network between Guangdong and Hong Kong, a cross-border infrastructure construction campaign has been launched. The construction of some major infrastructure projects, such as the Hong Kong-Zhuhai-Macao Bridge and the Guangzhou-Shenzhen-Hong Kong high-speed railway, have been started, which, together with other cross-border infrastructure projects, will give a big boost to cross-border traffic conditions between the SAR and the mainland.
The Closer Economic Partnership Arrangement and other pro-Hong Kong economic policies and measures adopted by the mainland have also greatly expanded service exchanges and cooperation between Hong Kong and Guangdong. In addition, a pan-Pearl River Delta economic cooperation model, which covers Hong Kong, Macao and more of the mainland's coastal provinces and regions, is also proceeding smoothly, which will help Hong Kong expand its economic development.
The author is a veteran current affairs commentator.