The mainland will expand the scope of a free trade pact with Hong Kong in the coming months, said an official familiar with the discussions who did not want to be named.

The fifth phase of the Closer Economic Partnership Arrangement (CEPA) between the mainland and Hong Kong is likely to be signed before the 10th anniversary of Hong Kong's return to the motherland in July, he said recently.

The official said the Ministry of Commerce and the government of the special administrative region had reached a consensus at a conference last month on expanding the opening up of services trade and facilitating investment.

The official did not reveal details, but analysts in Hong Kong predicted that the new deal may allow Hong Kong businesses to use renminbi to settle some transactions, such as for imports from the mainland.

Since the signing of the CEPA on June 29, 2003, the two sides have been working closely to broaden the arrangement. The second, third and fourth phases of the agreement were launched in October 2004October 2005 and June last year.

So far, the agreements cover nearly all products from Hong Kong as well as services and investment between the mainland and Hong Kong.

By the end of January, cargoes worth HK$7 billion have benefited from zero-tariff treatment; and the Hong Kong government has issued 1,700 certificates to service providers who benefit from CEPA, figures from the Hong Kong government showed.

The previous phases of the free trade pact have helped the SAR recover strongly from the economic downturn following the Asian financial crisis in 1998 and the outbreak of the SARS epidemic in 2003.

All the liberalization measures apply to Macao, with minor differences due to its different economic structure.

(China Daily 03/06/2007 page1)