"This is the kind of pact that many countries and regional economies would dream of," Tung told Xinhua.

He said he expected CEPA to be a new factor to rejuvenate the Hong Kong economy by offering business opportunities to Hong Kong's service and manufacturing industries and serving Hong Kong's economic transformation.

Under the arrangement, many Hong Kong products will enjoy zero tariff to enter the mainland market. On trade of services, a number of sectors including exhibitions and conventions, advertising, banking, securities and insurance in the mainland will be open to HK investment earlier than to foreign investment.

"The signing of the pact, from which Hong Kong will benefit a great deal, can fully reflect the Central Government's support for Hong Kong," said Tung.

It is foreseeable that with the country's fast economic growth, the China market will continue to grow in the following three to five years. CEPA would surely promote the Hong Kong economy in a big way, he said.

Speaking on Chinese Premier Wen Jiabao's coming visit to Hong Kong to attend the CEPA signing ceremony, Tung said this reflects the Central Government's great concern for the well-being of the Hong Kong people.

"Such arrangement will make Hong Kong people further realize that the Central Government's concern and help for Hong Kong is not only full of ardent spiritual encouragement but also substantial economic support," Tung said.

Tung, who was an initiator of the CEPA pact, recalled that he put forward a proposal to the Central Government that Hong Kong should seize the business opportunities brought by China's entry into the World Trade Organization to clench the partnership between the mainland and Hong Kong.

"Both sides have been aware that this would be a win-win arrangement for mutual economic development," Tung said.

A close economic and trade relation with the mainland has always been indispensable to Hong Kong's economic prosperity. The pact will fulfill the cooperation in full swing, he noted, adding that with a concerted effort over the past 20 years, the mainland has become Hong Kong's largest trade partner, and Hong Kong has become the largest investor in the mainland.

Official statistics show that trade volume between Hong Kong and the mainland stood at 17 billion HK dollars (about 2.2 billion US dollars) or 10 percent of HK's trade in 1979, but leapt to 1.3 trillion HK dollars (about 166 billion US dollars) in 2002, or 42 percent of Hong Kong's total trade. By the end of 2002, Hong Kong's direct investment in the mainland accumulated to 1.6 trillion HK dollars (about 205 billion US dollars), which went close to half of the total direct overseas investment in the mainland.

Tung said that preferential policies in CEPA will give HK products an edge in price competition to help increase their market shares in the mainland. The prospect can enhance investors' confidence, increase capital and personnel flows, and facilitate technology and information exchanges between the two sides.

The service industry in the mainland is still a weak segment in its overall economic structure, which accounts for only 30 percent of the Gross Domestic Product (GDP). However, the service industry, an important part in CEPA, has always been Hong Kong's specialty, which takes up 86 percent of the region's GDP. CEPA would give Hong Kong's service industry a broader stage to performance.

"A closer economic cooperation with the mainland in this sector will be helpful for Hong Kong to face challenges in economic restructuring and achieve further economic growth," Tung said.

Hong Kong's economic restructuring has been made necessary by the Asian financial crisis in 1997, Hong Kong's real estate "bubbles" and the fast economic development in the mainland.

Tung stated in the government report at the beginning of 2003 that Hong Kong's economic restructuring must be implemented alongside with its integration with the economy of the Pearl River Delta of Guangdong Province.

During the process of this regional economic integration, Hong Kong will exert its strength in such sectors as finance, logistics distribution, tourism and the industry and commerce, noted the report.

This policy has been proved to be in the right direction. Hong Kong achieved a GDP growth rate of 3.4 percent in the third quarter of last year, and 5.1 percent in the fourth quarter. The momentum was not even stopped by the outbreak of SARS (severe acute respiratory syndrome) in the first quarter this year, when Hong Kong achieved a 4.5-percent GDP growth.

"Economic growth in three successive quarters has spoken louder than anything else that the Hong Kong economy has been advancing on the right track, although a real economic rejuvenation needs time and the process of the restructuring is painful," said Tung.

The Hong Kong government has given great support to local companies to reinforce their footholds in the trade and investment market in the mainland, especially that in the Pearl River Delta. CEPA would effectively facilitate the effort, and hence contribute to the restructuring and create new jobs, he emphasized.

"With the signing of CEPA, the pace of Hong Kong's economic rejuvenation will become faster next year," Tung said.

(Xinhua News Agency June 29, 2003)