The central government is considering the proposal by the Hong Kong government to establish a free trade zone covering the mainland and the Special Administrative Region (SAR), Vice Foreign Trade Minister Long Yongtu said yesterday.

A free trade zone would probably play an active role in bringing mainland-Hong Kong economic ties closer, Long told reporters on the sidelines of the 14th General Meeting of the Pacific Economic Co-operation Council (PECC) in Hong Kong.

He said Macao - another SAR under the "one country, two systems" principle - should have no problem in joining the proposed free trade zone.

It would be difficult, however, to hold any free trade zone talk with Taiwan for the moment, as the island has shunned the issue of resuming direct three (trade, transport and postal) links across the Taiwan Straits, he said.

The idea of such a free trade zone does not violate the principle of the World Trade Organization (WTO), Long said.

At a press briefing during the PECC conference, Mike Moore, director general of WTO, shared the view that such an idea is in line with WTO rules. He cited the example of the European Union and the North America Free Trade Zone.

Earlier this month, China and 10 Southeast Asian nations agreed to set up a free trade area within 10 years.

Experts said establishment of the free trade zone will give an impetus to Hong Kong's economy, which is experiencing the pain caused by restructuring and the global economic slowdown.

The new situation after China's WTO accession calls for a new pattern of economic relations among the mainland, Hong Kong and Macao, Long told a PECC meeting.

China has in place a market economy and an open trading policy and the ability to achieve sustainable economic growth. The economy is expected to grow by at least 7 percent annually in the next five years.

It has taken China a "tremendous effort" to achieve this in the past 15 years by improving transparency in its legal system and committing itself to gradual market opening-up, he said.

China is now well prepared to handle the challenges and opportunities of economic globalization, Long said.

China is determined to honor its commitments to WTO and be a responsible member, Long said.

He admitted that difficulties would arise in fulfilling its commitments in fields such as protection of intellectual property rights (IPR).

IPR protection, however, is also crucial for China in upgrading its technological power and raising the quality of foreign direct investment, he noted.

(China Daily November 29, 2001)