Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA)
February 13, 2009
What is CEPA?
The Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) is the first free trade agreement ever concluded by the Mainland of China and Hong Kong. The main text of CEPA was signed on 29 June 2003.
CEPA opens up huge markets for Hong Kong goods and services, greatly enhancing the already close economic cooperation and integration between the Mainland and Hong Kong.
CEPA adopts a building block approach, and the two sides have been working closely to introduce further liberalization measures continually. The agreed liberalization measures for various phases of CEPA are stipulated in the CEPA Legal Text.
CEPA is a win-win agreement, bringing new business opportunities to the Mainland, Hong Kong and all foreign investors. For Hong Kong, CEPA provides a window of opportunity for Hong Kong businesses to gain greater access to the Mainland market. CEPA also benefits the Mainland as Hong Kong serves as a perfect “springboard” for Mainland enterprises to reach out to the global market and accelerating the Mainland’s full integration with the world economy. Foreign investors are also welcome to establish businesses in Hong Kong to leverage on the CEPA benefits and join hands in tapping the vast opportunities of the Mainland market.
Implementation
CEPA covers 3 broad areas:
Trade in goods – All goods of Hong Kong origin importing into the Mainland enjoy tariff free treatment, upon applications by local manufacturers and upon the CEPA rules of origin (ROOs) being agreed and met.
Trade in services – Hong Kong service suppliers enjoy preferential treatment in entering into the Mainland market in various service areas. Professional bodies of Hong Kong and the regulatory authorities in the Mainland have also signed a number of agreements or arrangements on mutual recognition of professional qualification.
Trade and investment facilitation – Both sides agreed to enhance co-operation in various trade and investment facilitation areas to improve the overall business environment.
Source: Trade and Industry Department
The Government of the Hong Kong SAR
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Hong Kong – No. 1 freest economy
February 13, 2009
Hong Kong – Hong Kong was on Tuesday ranked the world’s freest economy for the 15th consecutive year in a survey by the US think-tank the Heritage Foundation.
Singapore was again ranked second in the annual study, followed by Australia, Ireland and New Zealand. The US was ranked sixth, one place lower than last year.
At the opposite end of the survey, North Korea was ranked the world’s most restricted economy, followed by Zimbabwe, Cuba, Myanmar and Eritrea.
Hong Kong scored 90 out of 100 in the rankings, 0.3 points more than in 2008 and some 30 points above the world average of 59.5 points.
Of the 10 individual areas assessed, Hong Kong ranked first in trade freedom, investment freedom and financial freedom and was in the top 10 for business freedom, monetary freedom and property rights.
The pro-free market foundation said Hong Kong was one of the world’s leading financial centres and said its regulation of banking and financial services was transparent and efficient.
Responding to the survey, Hong Kong’s financial secretary John Tsang said: “We are determined to uphold Hong Kong as the freest economy in the world.
“We see the role of the government as that of a facilitator. We can provide a business-friendly environment where all firms can compete on a level playing field.”
A total of 179 global economies were judged on 10 criterion, including freedom from corruption and labour freedom, to decide the Heritage Foundation rankings.
Source: SAPA
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Chinese Ore Demand Leads to Further Freight Increases
February 11, 2009
The Baltic Dry Index – a composite of 22 main freight routes – leapt over 10% on 9 February to 1,815 aided by rising Capesize rates. The jump came on Monday, a day that is traditionally subdued in activity terms as shipping companies concentrate on vessel position lists.
Tubarao-China hit $25/tonne on Monday, up over $5/t in under a week to its highest level since early October. The long-term average of Tubarao-China since the beginning of 2003 is $38/t, brokerage Simpson Spence & Young tells Steel Business Briefing. Brazil-Rotterdam shipments reached $11.50/t, a rise of almost $3/t since 4 February, while Australia-China was up around $2.80/t at $10/t.
Brokers attribute the gains to stronger Chinese iron ore demand, primarily out of Brazil, and increased congestion: around 50 Capesize vessels are waiting to berth off China. Chinese ore stocks at port have increased slightly over the last few weeks, to just over 60mt according to SSY, but this is unsurprising because of the higher activity.
Tonnage in the Atlantic basin also looks tight in the short-term – according to brokers. This means there are less open ships from charterers to choose from, which normally pushes up rates.
Shipments of iron from India to China, normally carried out on Supramax vessels with a deadweight of between 50-60,000 t, have also climbed as a result of stronger chartering interest. Charterers are paying around $14,000/day for the route, equivalent to around $11/t. This is substantially up from the October bottom of $2,000/day.
Source: Steel Business Briefing
http://www.steelbb.com
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China overtakes US as world’s top car market
February 11, 2009
CHINA overtook the United States as the world’s largest auto market for the first time when it sold more cars, 735,500 units, in January, the China Association of Automobile Manufacturers said yesterday.
But the January figure was a drop of 14.35 percent year-on-year and this indicated that sentiment in China’s auto industry is still in a downtrend because of a global financial crisis. Analysts, however, agreed that the market showed signs of an early recovery with government support and lower fuel prices.
Vehicle sales in China rose 6.7 percent to 9.38 million units last year. Sales may grow 5 percent this year, the slowest pace since 1998, CAAM said earlier.
January vehicle sales in the US plummeted 37 percent to 656,693 as more auto makers closed down plants and laid off thousands of workers.
The association reports said China’s passenger cars dropped 7.77 percent to 610,000 units last month, following a 12-percent slump in December
But the slower drop in sales was helped by the central government’s measures such as cutting fuel prices and halving a vehicle sales tax on small cars to counter a slump in the automotive industry since August last year.
“The fuel tax reform and tax cuts work effectively as sales of vehicles powered by 1.6-liter engine or less enjoyed rapid growth from a month earlier,” Zhu Yiping, a director at CAAM, said. “This helped passenger car makers to cut inventory by 80,000 units.” He added that the overall stockpile of Chinese car makers also hit its 13-month low.
Selling commercial vehicles remained tough due to the economic situation as their sales plunged 36.46 percent to 125,100 units in January, CAAM said.
China announced a 4-trillion-yuan (US$586 billion) economic stimulus package and favorable policies including tax cuts and road-toll abolishment in January to spur demand.
However, most analyst cautioned that the sales pickup won’t last long and they remain skeptical that China would remain the world’s biggest car market for the year.
“We should not be too optimistic as the impact of favorable policies may be weaker as time goes on,” said Rao Da, secretary general of China Passenger Car Association. “Sales of vehicles with engines larger than 1.6 liters are not expected to boom and overall sales will still be hampered by a weak economic outlook and lower exports.”
Source: Shanghai Daily
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China strains to see light at end of tunnel
February 11, 2009
China strains to see light at end of tunnel
By Geoff Dyer at Financial Times
China to the rescue? There has been a surge of hope in the markets over the past 10 days that China’s struggling economy has already turned a corner.
The Baltic dry shipping index – the much-watched measure of the cost of shipping raw materials around the world – has jumped more than 50 per cent in a week on hopes of rising demand for commodities from China, while the prices of several metals have also risen sharply. The Chinese stock market is up 13 per cent in the 10 days since the end of the Chinese new year holiday.
Such optimism might seem strained given the avalanche of downbeat economic news that has come out of China over the past three months. Yet some government officials have started to sound a similar tune.
Official newspapers on Tuesday quoted Su Ning, deputy governor of the People’s Bank of China, as declaring that the first signs of recovery had become visible at the end of last year and that China could be the first big economy to recover.
Investors betting on a Chinese rebound are confident that the government’s huge package of fiscal and monetary stimulus measures is beginning to bite and there is some evidence to back them up.
In recent days local media have reported that new loans issued in January reached Rmb1,200bn ($176bn, €135bn, £120bn) following big increases in lending in November and December. If the figure is confirmed, it would be more than three times the average in the first nine months of last year. (Reuters reported that the figure was even higher at Rmb1,600bn.)
The strong credit growth is an indication that the government is succeeding in using state-owned banks to push money through the door.
“Unlike their counterparts in the rest of the world, China’s banks should be an effective transmission mechanism for the ongoing loosening of monetary policy,” says Paul Cavey at Macquarie Research.
Rising prices for iron ore, steel and other metals are being interpreted as signs that China’s big infrastructure spending plans are being implemented quickly. A senior Chinese official told the Financial Times last week that the Rmb4,000bn of projects in the government’s fiscal stimulus had already been approved.
Source: Financial Times
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