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Trade deal sparks rare HK optimism
HONG KONG, China -- After a bad start to the year Hong Kong is looking to the free trade agreement signed with China as the catalyst that helps turn around the region's fortunes. A prolonged economic slump, record high unemployment and, most recently, the SARS epidemic have all taken their toll on the former British colony. The agreement, signed Sunday by Chinese Premier Wen Jiabao and Hong Kong Chief Executive Tung Chee-hwa will remove many barriers to Hong Kong firms doing business in mainland China. Hong Kong companies, especially those in service industries like insurance, banking, law, advertising and real estate will gain greater access to the huge Chinese market. Premier Wen, speaking in Hong Kong after the signing ceremony, called the deal "only the first step toward closer economic partnership between Hong Kong and the mainland." The mainland is used as a low-cost manufacturing base by many Hong Kong companies. Some 273 types of goods from Hong Kong will be able to enter China with no tariffs as of January 1, with many more products to lose their tariffs within two years, The Associated Press reports Wen saying. Hong Kong also will be the first to get some concessions China has promised to members of the World Trade Organization, Wen said. "It's a sign that the central government is giving us something concrete here, and it's giving us face and a little bit of a lift," Howard Gorges, from South China Brokerage, told CNN. Hong Kong Commerce Secretary Henry Tang predicts the deal will save businesses $96 million. Financial Secretary Antony Leung told a news conference the benefits will flow through "almost immediately" as investors gain more confidence in the region. But many question marks remain, most notably, which companies will be deemed eligible for favorable status. Hong Kong officials haven't said yet. Symbolic valueSome executives have voiced concern that firms controlled or run by foreign interests could be frozen out in favor of locally-run companies, casting doubt on Hong Kong's reputation as a level playing field for business. Sean Darby, senior strategist for Nomura International in Hong Kong, told CNN that the agreement would have a relatively small impact on the territory's economic health. He said the more important question ahead was how sustainable China's growth rate proved to be. And the pact is likely to do little to dampen public anger at government plans to introduce a sweeping anti-subversion bill that many believe could erode civil liberties in Hong Kong. Still, after so many months of unrelenting bad news, the symbolic value of the deal is itself significant. If nothing else, it is a sign that Beijing is prepared to support Hong Kong during tough economic times. -- Senior Asia Correspondent Mike Chinoy and The Associated Press contributed to this story. Copyright 2003 CNN. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. Associated Press contributed to this report.
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