China promises measures to boost HK economy

By Joe McDonald, AP

BEIJING — China’s Cabinet announced measures Wednesday aimed at boosting Hong Kong’s anemic economic growth as the semiautonomous territory prepares for a weekend visit by Chinese President Hu Jintao. The Cabinet promised to promote Hong Kong’s status as a center for offshore finance using the mainland’s tightly controlled currency, the yuan. It said it would encourage closer trade, travel and investment links. Hu is due in Hong Kong for weekend ceremonies marking the 15th anniversary of the end of British colonial rule and the inauguration of its third post-colonial leader, Leung Chun-ying. Leung takes office amid a swell of discontent over a widening rich-poor gap, surging housing costs and growing unease with China’s communist leaders. The Hong Kong economy barely grew in the past quarter as exports shrank amid weak global demand. The government said Tuesday the economic outlook is “challenging” due to Europe’s debt crisis. Hong Kong retained its own currency and legal system with Western-style civil liberties following the 1997 return to Chinese sovereignty. Beijing promised the territory a high degree of autonomy for 50 years.

Wednesday’s announcement said Beijing will encourage foreign investors to use Hong Kong for settling trade and investment contracts in yuan. It said regulators also will improve the variety of yuan-based services available through Hong Kong and facilitate investment from the territory in mainland stock markets.

Mainland authorities also will encourage joint ventures between Hong Kong’s stock exchange and mainland exchanges in Shanghai and Shenzhen, the Cabinet said. It said mainland companies will be encouraged to invest abroad jointly with Hong Kong partners. The central government will promote coordination among airports, railways and ports in Hong Kong and mainland areas on the Pearl River Delta, the Cabinet said.

Vice Premier Li Keqiang, widely expected to become China’s premier next year, announced similar yuan trade-boosting measures when he visited Hong Kong last year.