HONG KONG, Dec. 31 (Xinhuanet) -- Mainland factors have continued tofunction as a shot in the arm for Hong Kong's economic developmentfor the year 2004, economic watchers noted at the year end.

    According to Hong Kong Financial Secretary Henry Tang, Hong Kong's economic growth this year may reach 7.5 percent, higher than the previous forecasts of the Hong Kong Special Administrative Region government and of the financial institutions.

    In Tang's view, the economic development in the Chinese mainland has been and will continue to be the positive factor propelling Hong Kong's economic growth.

    The complementary and mutually beneficial economic relations between Hong Kong and the Chinese mainland, established since the mainland initialed the reform and opening-up policies in 1978, have enjoyed ever-deepening growth over the years.

    The mainland, with its vast population and robust economic development, enhances Hong Kong's traditional advantages and attractiveness in the eyes of foreign investors as a bridge linking the mainland with the overseas.

    In the first half of this year, some 89 new foreign enterprises have set up their regional headquarters in Hong Kong, a rise of 24 from the same period last year. Their presence in Hong Kong, more often than not, will be followed by their exploration of the mainland market.

    The mainland enterprises, encouraged by the country's "going-out" policy, are actively looking for opportunities for overseas expansion, and Hong Kong proves to be an ideal platform facing the global market and international investors. In November alone, a total of ten provinces and cities from the Chinese mainland have launched investment-attracting promotions in Hong Kong.

    In the stock market, Hong Kong's securities market set a number of new records in 2004, with the market turnover amounting to 3.79 trillion HK dollars (485.89 billion US dollars) as at Dec. 15, 3.9billion HK dollars more than the previous record set in 1997.

    As of Dec. 10, the number of H share and red-chip companies accounts for 27 percent of total 1,027 listed companies, and 30 percent of the whole market value.

    In terms of new listings, mainland companies raised 71 billion HK dollars (9 billion US dollars) so far this year through Initial Public Offering (IPO), representing three quarters of the total. In fact, mainland companies are more actively trading here. It accounts for 50 percent of the total trading volumes so far this year.

    Meanwhile, mainland investment continues to flood into Hong Kong. According to statistics released by InvestHK, set up by the Hong Kong Special Administrative Region government to assist corporations looking for direct investment opportunities in Hong Kong, Hong Kong has lured 1,479.8 million HK dollars (189.7 million US dollars) from the Chinese mainland during the first three quarters of 2004, compared with the 182.8 million HK dollars(23.4 million) for the whole year of 2003.

    The brisk performance of the main economic industries of Hong Kong, more or less, is also attributable to the support from the Chinese mainland. This is of special importance to Hong Kong, where the service industry occupies 87 percent of its GDP.

    In the tourism sector, Hong Kong received 19.7 million visitorsin the first 11 months of the year, a 43.5 percent increase from the same period in 2003. Of the total, 11.1 million came from the Chinese mainland. And of the total mainland visitors to Hong Kong,34 percent came to Hong Kong under the Individual Visit Scheme.

    The scheme, introduced by the Chinese central government, grants more and more mainland visitors the choice of visiting Hong Kong on an individual basis instead of joining packaged tours offered by the travel agencies.

    The booming tourism industry has facilitated the thriving of Hong Kong's transport, retail and hotel businesses.

    Mainland visitors, apart from their huge number, are also amongthe most generous visiting spenders in Hong Kong. Since January this year, when mainland visitors would use their RMB credit cards in Hong Kong to shop, some 2 billion HK dollars (256 million US dollars) have been spent or drew. Per spending of these credit cards amounts to 3,000 HK dollars, higher than that of the visitors from any other countries or regions.

    Cumulatively for the first 11 months of 2004, Hong Kong's average occupancy stood at 87 percent, and November's hotel occupancy hit a 16-year high of 96 percent.

    Hong Kong's 68-month-long deflation ended in July this year, and Hong Kong's unemployment rate dropped from last year's 8.7 percent to the current 6.7 percent, while the total number of the employed reached the historical high of 3.3 million.

    Also in 2004, to the great joy of the Hong Kong business people,the Closer Economic Partnership Arrangement (CEPA), the first bilateral free trade agreement between Hong Kong and the mainland,came into effect.

    The pact enabled Hong Kong business people to enjoy the head-start in accessing the mainland market ahead of foreign competition. By Dec. 13, a total of 2,811 items of goods, worth 1.68 billion HK dollars (215 million US dollars) have been approved by the Trade and Industry Department of Hong Kong to enter the mainland free of duties.

    In the meantime, an increasing number of producers moved production bases back from the mainland to Hong Kong to take advantage of the duty-free exports. Some experts even foresee this as a signal of the regeneration of Hong Kong's manufacturing power.     

    Moreover, an increased number of preferential measures will benefit Hong Kong industries in the coming new year of 2005, when CEPA II will come into force.

    Under CEPA II, another 713 items will enjoy zero tariffs, with the newly approved all being requested by the Hong Kong industries themselves. Moreover, eight new service sectors will be opened forHong Kong investors, in addition to the previous 18 service sectors.

    Director of Hong Kong's Trade Development Council's mainland division Roger Chu pointed out that almost all the sectors that could be opened to Hong Kong will be opened in 2005, and Hong Kong businesses should not miss their chance.

    Looking ahead, Hong Kong's exports are expected to expand at a slower, but sustainable pace in 2005, with total exports to rise 8.5 percent in value or 7.5 percent in volume, Hong Kong's Trade Development Council (TDC) Chief Economist Edward Leung said.

    He expressed the belief that the United States and the Chinese mainland, the world's two most powerful economic growth engines, will continue to fuel Hong Kong's exports growth in the new year.

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