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SCMP Reporter

HONG KONG is to remain a separate economic entity after 1997 and co-operation with China will be similar to that between independent partners, a major mainland economic blueprint has affirmed.

The combined Ninth Five-Year Plan (1996-2000) and the economic blueprint for 1996 to 2010 underscores the importance of maintaining Hong Kong's success formula - and enhancing its contribution to the mainland.

First drafts of the joint report, which are being debated by central and regional leaders, will be endorsed by the fifth plenum of the Communist Party central committee next month.

While the part dealing with Hong Kong forms only a small portion of the blueprint, it presents a positive scenario for economic co-operation between the Special Administrative Region (SAR) and the mainland.

According to one draft of the report, after 1997 the political relationship between the mainland and Hong Kong will be that 'between a parent and child'.

However, in economic terms, the ties will be that between separate, independent economic entities.

'In the international arena, the two [the mainland and Hong Kong] will have independent developments; they will co-operate with each other and compete with each other,' Beijing sources quoted the draft as saying.

It points out that if, after 1997, Hong Kong could maintain its 'economic independence and autonomy', the SAR could make a higher contribution to the mainland.

'Hong Kong is not only the bridge through which the hinterland reaches the world; it is also the mainland's best partner in economic development,' the draft reportedly says.

It points out that Hong Kong can best help the mainland in raising funds and in attracting investment of different kinds.

The blueprint recommends further research on the division of labour between the two economic systems, and paints a glowing picture of the development of Hong Kong as an 'off-shore financial centre' for China.

After 1997, Hong Kong should play an even larger role in helping mainland government units and enterprises raise capital in the world money markets.

This, in turn, will attract more international capital and foreign financial institutions to the SAR, further consolidating its position as an international financial centre.

The SAR will also serve the motherland by providing channels for Chinese products to reach the world market. Similarly, Hong Kong businesses should help mainland factories and service units secure orders from overseas firms.

The document also mentions Hong Kong's 'beneficial contributions' to economic exchanges with Taiwan.

It points out, however, that the correct implementation of the Basic Law is a prerequisite for the kind of political environment that would allow Hong Kong to continue to flourish as a financial and business centre.

And what can the mainland do for Hong Kong?  The blueprint says that through enhanced economic and technological co-operation, the local economy will become multi-dimensional and more able to adapt to global changes.

Meanwhile, sources in Beijing said yesterday that a State Council team reporting to premier Li Peng is finalising an elaborate report on Sino-Hong Kong economic co-operation.

Drafted by more than 10 ministries and commissions, the document is separate from the Ninth Five-Year Plan.

'It looks at concrete, micro-level areas where co-operation between the mainland and the SAR economies can best take place,' a source said.

There are detailed recommendations for areas including infrastructure, investment, human resources, trade and economic policy.

It is understood that Beijing wants Hong Kong to serve the bulk of the country, not just Guangdong.

To this extent, the source added, the State Council was anxious to prevent Guangdong and individual cities such as Shenzhen from 'monopolising' Hong Kong's resources.

This is despite the fact that, independent of Beijing, provincial and municipal authorities in Guangdong had drawn up their own plans for 'integration' with the Hong Kong economy.

One such plan by Shenzhen, for example, envisages the development of Hong Kong and the Special Economic Zone into twin cities.

However, it is not clear if the State Council report, which will be endorsed by the leadership early next year, will be publicised.

Apart from the economy, blueprints for the SAR role of the Communist Party and the People's Liberation Army are being finalised.



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