Ten Years After CEPA – Let’s Evaluate What HK Has Gained…

Facebook Political Analysis Page 正政唯識

8th April, 2014

Ten Years After CEPA

In light of the weeks-long CEFA protest in Taiwan, a Facebook page focuses on HK affairs put together a summary of CEPA – with an aim to warn Taiwanese that they must not allow China to use economic power to “take over” Taiwan:

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10 Years After CEPA…

Manufacturing Industry

Agreement says: “Promote Manufacturing Industry”

Reality is: the number of people in the manufacturing industry dropped from 154,495 to 103,683. Zero growth in both import/export and wholesale sectors in the past ten years.

Financial Industry

Agreement says: “Services Liberalisation”

Reality is: only 11 applications from Hong Kong were received so far, one quota for each location. However, CEP allows Chinese companies to open branches in Hong Kong – so far there are 24 security houses, 6 futures and 22 asset management companies from China have opened in Hong Kong.

Insurance Industry

Agreement says: “facilitate Hong Kong insurance companies to enter Chinese market”

Reality is: only 14 applications have been submitted, SME companies and employees in the insurance sector benefited nothing from the agreement.

Movie Industry

Agreement says: “Hong Kong movies are excempted from China’s movie import quota”

Reality is: only 3 Hong Kong movies are allowed in China in 2012, with a total box office of HK$22 million.

Professionals

Agreement says: “encourage to practice in China”

Reality is: Chinese lawyers who want to practice in Hong Kong are required to take OLQE and the passing rate is above 70%, whilst Hong Kong lawyers who wish to practice in China 99% of them fail China’s exam.

Tourism Industry

Agreement says: “zero tariff”

Reality: Individual Travel Scheme only boosts the growth of low-value-add businesses. Low skill industries cannot move up the chain leading to the decay of economic structure (reliance on one industry), which pushes the operation costs locally and increases the burden on social resources, as a result ruins the development of other industries.
20 out of the 52 industries listed in CEPA received no applications so far.

 

CEPA has been in place for ten years. It has been proven that it is extremely difficult, if not impossible, for Hong Kong’s professional services to enter China. On the other hand, Hong Kong is completely opened to Chinese companies, allowing Chinese companies to take control of all sorts of industries in Hong Kong. These Chinese companies also send their staff from China to Hong Kong who leverages their social status and positions to interfere government policies and Hong Kong’s political affairs. By simply joining the chambers of commerce, Chinese companies will be given the rights to vote in the functional constituency during the Legislative Council election. The bosses and senior executives in Chinese companies can also obtain Hong Kong permanent residency easily, after working in Hong Kong for seven years, they can become legitimate voters. Via CEPA (ECFA in Taiwan is no different), China and the CCP can easily takeover a country with economic means and saving all the bullets.

According to Census and Statistics Department and Trade and Industry Department, out of the total 361,037 Hong Kong companies, only 0.5% of them (1,851 companies) have received approval to operate or trade in China in the past 10 years. Logistics and distribution companies are the majority of these lucky ones, with 645 and 266 have gained the approval respectively. Looking at the core high-value-add industries and the foundations of Hong Kong’s economy, which are: accountancy, securities and futures, insurance and banking and finance, only 40 of them have gained access to China. A total of just over 50 medical professionals are allowed to practice in China.

In the first seven years after CEPA was signed, over 60 million visitors travelled to Hong Kong via the Individual Travel Scheme (ITS), which brought millions worth of economic interest to Hong Kong. However, during the SAR outbreak in 2003, visitors who came to Hong Kong via ITS contributed no more than 1% of Hong Kong’s GDP, and is far from what China’s propaganda which says “Chinese tourists saved Hong Kong”. Tourism, one of the four core industries in Hong Kong historically, has directly and indirectly contributed 15.2% to Hong Kong’s annual GDP. Direct contribution from visitors is approximately 2.6%, given that Chinese tourists account for 71.8% of the total visitors in Hong Kong, one can easily figure out the contribution delivered by ITS. Hong Kong does not only seen limited benefit brought by ITS, the price it has to pay is huge: for example, skyrocketing rents, ever growing inflation and the fall of locals’ living standard, just to name a few.

Hong Kong businesses account for 64% of China’s total foreign direct investment – which is higher than the combined FDI from Taiwan, Singapore, Japan, USA, EU), and has dominated the #1 ranking of the largest source of FDI in China for 33 years – indirectly or directly providing jobs to China. Hongkongers who visit China could pretty much only purchase products that are made in China, but Chinese visitors in Hong Kong only purchase good produced everywhere outside of Hong Kong – which highlighted, once again, that the contributed ITS brought about is extremely limited. By the same token, retail sector in Hong Kong sees close-to-nothing benefit in the end too.

Related Articles:

China Uses Economic Means to “Acquire” Taiwan – Hong Kong’s Example Shows: Businessmen Can be Bought, Not the General Public
Taiwan’s “Godfather of Tourism”: Taiwan must not Follow Hong Kong’s Same Mistake to Attract Large Number of Chinese Tourists

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