Report on Beijing Mission 00

REPORT ON HKCSI DELEGATION TO BEIJING

4 & 5 July 2000

For more details: Report on "Chamber services think tank connects with Beijing thinkers"

BACKGROUND

The HKCSI has been maintaining a close relationship with the State Development Planning Commission (SDPC) since 1996. The two parties jointly organised training seminars in 1997 and 1998 to promote modern concepts of tertiary industries to Chinese officials, and initiated a research study on urbanisation in 1999. We also visited each other on a regular basis to maintain working relationship in the past few years. On 4 and 5 July 2000, the HKCSI pay its fourth visit to Beijing. The purposes were to exchange views on the development of tertiary industries in China with policy making bodies, to maintain goodwill with some operating level Ministries, and to explore opportunities for future cooperation.

ORGANISATION

Led by HKCSI Chairman Mr Stanley Ko and Mr George Leung, the 10-member delegation met with Mr Wang Yang, Vice Minister of the State Development Planning Commission (SDPC), as well as the Ministry of Foreign Trade and Economic Cooperation and the Development Research Centre of the State Council. A welcoming lunch was hosted by SDPC on 4 July 2000. List of delegates and group itinerary are attached.

OBSERVATIONS

The delegation was warmly received by the State Development Planning Commission. Delegates were given the opportunities to meet with appropriate officials and "think tanks" of the Chinese government, including

Mr Yang Weimin, Deputy Director General, Department of Development Planning, State Development Planning Commission

Mr Bai Hejin, President, Academy of Macroeconomic Research, State Development Planning Commission

Mr Ning Jizhe, Deputy Director General, Comprehensive Planning Department, Office of the West Regional Development Leading Group of the State Council

Mr Zhang Zunhai, Deputy Director General, Foreign Investment Administration, Ministry of Foreign Trade and Economic Cooperation

Prof Zhang Xiaoji, Director General, Foreign Economic Relations Department, Development Research Center of the State Council

Meeting notes are attached (Chinese).

China's entry into the WTO is now a matter of time. To prepare for the opening, officials seemed much more ready to accept opinions that make them more knowledgeable about the modern service economy. Chinese officials acknowledged the importance of service industries attached to the national economy, and the experience of Hong Kong as one of the valuable sources for learning.

To improve efficiency within the bureaucracy, the government restructuring has substantially reduced manpower of ministries and departments. Many of them were responsible for multi-tasks, and they were used to working beyond the official working hours. With the already established friendship, the delegation was advised not to host a return banquet so that the officials could have more time to accompany their families.

Another result caused by the government restructuring is the conflict of interests among government departments. A clear division of responsibilities will avoid "dual control" and provide "one-stop" services to foreign investors, but in the process some power struggles among ministries and departments seemed unavoidable. However, this is part of the modernisation process and the Chinese government is on its right track.

Moderisation requires not just the development of hardware, but also the "soft" business infrastructure. The delegation was much impressed by the new airport in Beijing, but they spent 45 minutes waiting for immigration clearance. Besides, catering services in the airport were much more expensive than other international airports. That experience reinforced us that China should enhance the promotion of customer-friendly services, not just for tourists but also traders.

Detailed Meeting Notes (Chinese)

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HKCSI Chairman Mr Stanley Ko presented Chamber WTO report and Hong Kong "wish list" to Mr Wang Yang, Vice Minister of State Development Planning Commission

Detailed Meeting Notes (Chinese)

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Welcoming lunch hosted by Mr Yang Weiming, Deputy Director General of the Department of Development Planning, State Development Planning Commission

Detailed Meeting Notes (Chinese)

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Mr Bai Hejin (right), President, Academy of Macroeconomic Research

Detailed Meeting Notes (Chinese)

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Mr Zhang Zunhai, Deputy Director General of Foreign Investment Administration, Ministry of Foreign Trade and Economic Cooperation

Detailed Meeting Notes (Chinese)

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Prof Zhang Xiaoji, Director General, Foreign Economic Relations Department, Development Research Center of the State Council

Detailed Meeting Notes (Chinese)

RECOMMENDATIONS

Chinese officials acknowledged that they were not yet well prepared for the entry into the WTO, but they also assured us that Hong Kong would receive the same treatments as the other foreign investors. Given our cultural link and economic relationship, officials welcomed input from Hong Kong companies that could help develop the tertiary industries in the mainland. In this regard, the delegation proposed and the Ministry of Foreign Trade and Economic Cooperation expressed interest to jointly form a working group (see notes on "China Entry into the WTO" ).

A positive message was noted from the officials that Hong Kong would retain its intermediary role after China's entry into the WTO, and would hardly be replaced by Shanghai in the short term. Even without preferential treatment to Hong Kong investors, we are still enjoying competitive advantages over other foreign countries. The opening of mainland's tertiary sectors and the promotion of domestic consumption will provide many opportunities for Hong Kong services providers, and we will have much to gain from foreign companies after China's entry into the WTO. Hong Kong companies should prepare for the changes to take advantage of the opening (see notes on "Hong Kong/Mainland Relationship" ).

Despite the technical difficulties of implementing "Free Trade Agreement" between the mainland and Hong Kong, it is comforting to know that officials are treating Hong Kong investors as "family" , so that "Hong Kong Factor" would be considered when policies are drafted. As the concept of "Priority on Equal Basis" is well considered by the officials, Hong Kong investors should enhance their working relationship with the officials and their Chinese partners and be responsive to new regulations (see notes on "Free Trade Agreement" ).

The major theme of the Tenth Five-Year Plan is the development of tertiary industries. The objective is to improve the living standard of population by urbanisation, which is a lengthy process. Hong Kong companies with interest in participating in the development should have long-term commitments and sense of social responsibilities in conducting their China business, helping build solid relationship with the Chinese government and for mutual benefit (see notes on "Tenth Five-Year Plan" ).

The aggressive plan to develop central and western region will be promoted through the development of two major services sectors as "dragon head" - tourism, and its supplementary services – transportation. These are the areas where Hong Kong companies should pay attention to (see notes on "Development in Central/Western Region" ).

The delegation was given the opportunities to meet with two think tanks of the Chinese government: Academy of Macroeconomic Research of the State Development Planning Commission and the Development Research Center of the State Council. Both were very knowledgeable of the issues concerning economic development in China, Hong Kong and WTO. As there are many topics of mutual interest, the HKCSI should maintain its connection with these Chinese think tanks in the hope of forming some cooperative projects.

There is much scope for further work on the mainland's economical, trade and investment policies. The HKCSI has a good relationship with the policy think tanks in Beijing which has the potential to be further developed, e.g. through joint studies, cooperative projects, etc. In order for this work to be effective, coordination with the Chamber China Committee is essential. It is recommended that the CSI's work on China should come under a broader China strategy of the Chamber.

The delegation was given the information that the mainland government departments are beginning to take the internet seriously as a means of information dissemination. There may be room for the Chamber to consider making greater use of mainland government websites, or even developing some joint efforts relating to the internt.

Members are recommended to visit the following websites to get the latest information for conducting China business:

State Development Planning Commission (www.sdpc.gov.cn)
Academy of Macroeconomic Research (www.sdpc.gov.cn/c/cindex.htm)
Ministry of Foreign Trade & Econ. Coop. (www.moftec.gov.cn/chinese/index.html)
Development Research Centre (www.drc.gov.cn, currently under construction)

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Thinex Shek

Mission Secretary

13 July 2000

For more details: Report on Chamber services think tank connects with Beijing thinkers