'One country, two systems' policy in HK

2. Supporting the HKSAR in Reinforcing and Enhancing Its Competitive Strengths

Supporting Hong Kong as an international center of finance, trade and shipping. The central government supports Hong Kong in launching individual use of RMB, issuing RMB bonds and conducting trials of RMB settlement in cross-border trade, thus consolidating Hong Kong's position as a leading offshore RMB market. It has continued to encourage the listing of mainland enterprises on the stock market in Hong Kong, and introduced other measures to support Hong Kong's financial sector. In 2013, a total of 216 Hong Kong banks joined the RMB clearing platform, and the amount of cross-border RMB settlement in Hong Kong reached RMB3.84 trillion, accounting for 82.9 percent of the total cross-border RMB settlement of China. The balance of Hong Kong's RMB customer deposits and depository receipts reached RMB1 trillion. Hong Kong has become the world's largest offshore RMB trading center. After the signing of the CEPA in 2003 and its coming into force in January 2004, the mainland signed and implemented ten supplementary agreements with Hong Kong. The mainland now gives zero tariff treatment to all products of Hong Kong origin. From that time to the end of 2013, the mainland imported from Hong Kong goods worth US$7.161 billion under the CEPA, with tariff preference of RMB3.983 billion for Hong Kong. The mainland also adopted a total of 403 liberalization measures in respect of trade in services. Based on WTO classification, the mainland has opened to Hong Kong 149 areas of trade in services under the CEPA and its supplementary agreements, accounting for 93.1 percent of the total number of such areas of the mainland. This makes the CEPA the most open agreement on free trade that the mainland has ever signed. In addition, Guangdong Province has adopted 82 pilot measures to open its services industries to Hong Kong. When drawing up the National Plan for the Layout of Coastal Ports, and the 12th Five-Year Plan for the Comprehensive Development of Transportation Systems, the central government took into account the need to consolidate and enhance Hong Kong's position as an international shipping center.

Supporting Hong Kong in developing its tourism and retail sectors, and Hong Kong-invested companies on the mainland. At the request of the HKSAR government, the central government gradually expanded the Individual Visit Scheme to 49 pilot cities, with a total population of over 300 million. By the end of 2013, some 129 million mainland residents had visited Hong Kong under the Individual Visit Scheme. According to estimate of the HKSAR government, in 2012 alone the Individual Visit Scheme contributed to 1.3 percent increase of Hong Kong's GRP of the year, and it created more than 110,000 jobs, accounting for 3.1 percent of the local employment. To bring more benefits to medium-sized and small businesses and residents in Hong Kong, the central government also allows Hong Kong residents to start individual businesses on the mainland. By the end of 2013, a total of 5,982 individual businesses opened by Hong Kong residents had been registered on the mainland, employing 16,476 people. The central government encourages the development of Hong Kong processing and trading companies on the mainland, and has assisted the transformation and upgrading of Hong Kong-invested companies on the mainland. In 2009, Guangdong Province introduced 30 policies to help companies established with Hong Kong, Macau and Taiwan investment weather the international financial crisis and accelerate their transformation and upgrading. In December 2011, the central government issued the Guidelines on Promoting the Transformation and Upgrading of Processing Trade, and set up demonstration zones and pilot cities for the transformation and upgrading of processing trade in Suzhou and Dongguan, as well as 44 key areas in central and western China to relocate enterprises of processing trade in a phased way. 3. Supporting the HKSAR in Strengthening Exchanges and Cooperation in Various Fields with the Mainland

Since Hong Kong's return to China in 1997, the central government has made the maintenance of its prosperity and stability an important part of the country's overall development strategy. Both the 10th and 11th Five-Year Plans stress the need to ensure lasting prosperity and stability in Hong Kong, and strengthen its position as an international center of finance, trade and shipping. In the 12th Five-Year Plan, for the first time, the development of Hong Kong and Macau is dealt with in an independent section. This has further defined Hong Kong's strategic position in China's development strategy and stressed the state support for Hong Kong in enhancing its competitive edge, fostering emerging industries and deepening economic cooperation with the mainland.

Supporting the HKSAR further in developing economic and trade cooperation with the mainland. The implementation of the CEPA and its supplementary agreements has removed a great deal of institutional barriers in trade, investment and other sectors between Hong Kong and the mainland, strengthened their economic and trade relations, and broadened the range of cooperation, with both sides benefiting from their cooperation. Currently, the mainland is the largest trading partner of Hong Kong. According to Hong Kong statistics, in 2013 the trade volume between Hong Kong and the mainland reached HK$3.8913 trillion, 3.49 times that of 1997 and accounting for 51.1 percent of Hong Kong's external trade. At the same time, Hong Kong is the mainland's most important trading partner, a key export market and the mainland's largest off-shore financial center. By the end of 2013, mainland enterprises listed in Hong Kong had totaled 797, accounting for 48.5 percent of the total number of Hong Kong listed companies. In addition, their total market value had reached HK$13.7 trillion, accounting for 56.9 percent of the total value of the Hong Kong stock market. In addition, the mainland and Hong Kong are each other's largest source of overseas direct investment (ODI). By the end of 2013, Hong Kong's ODI from the mainland had exceeded US$358.8 billion, accounting for nearly 60 percent of the mainland's total ODI; the mainland had approved nearly 360,000 projects with Hong Kong investment, involving US$665.67 billion in total and accounting for 47.7 percent of the mainland's total ODI.