The Mainland-Hong Kong Closer Economic Partnership Arrangement (CEPA) signed in Hong Kong on Sunday would be a "new powerful booster" for Hong Kong's economic transformation, said Hong Kong Chief Executive Tung Chee-hwa In an interview with Xinhua.

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

He said he expected the 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 serve Hong Kong's economic transformation.

For example, the CEPA would give Hong Kong's service industry a broader stage for performance. The service industry on 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 of the CEPA, has always been Hong Kong's specialty, which takes up 86 percent of the region's GDP.

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

The pact can also help Hong Kong's economic restructuring, which was made necessary by the Asian financial crisis of 1997, Hong Kong's real estate "bubbles" and fast economic development on the mainland.

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

During this process, Hong Kong would exert its strength in such sectors as finance, logistics distribution, tourism, and 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 interrupted by the outbreak of SARS in the first quarter this year, when Hong Kong achieved a 4.5-percent GDP growth.

"Economic growth in three successive quarters has said 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 restructuring is painful," said Tung. "With the signing of the CEPA, the pace of Hong Kong's economic rejuvenation will become faster next year," Tung said.

"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.

Editor: James