Trade pact is unlikely to dampen foreign investment, says official in border city Shenzhen will still be a magnet for foreign and Hong Kong investors even if Hong Kong secured duty-free exports to the mainland under the proposed Closer Economic Partnership Arrangement (Cepa), a Shenzhen trade official said. Wang Xiaochun, deputy director-general of the Shenzhen Bureau of Foreign Trade and Economic Co-operation, said talks aimed at forging closer economic links between Hong Kong and the mainland were now under way between the Guangdong and Hong Kong governments. Speaking at a trade seminar organised by the Hong Kong Trade Development Council, Mr Wang said he was unsure if zero export duties would be introduced. But even if a free-duty system was established, he said the agreement was unlikely to dampen the status of Shenzhen, which attracted foreign direct investment of US$41.7 billion last year. Last week, State Councillor Tang Jiaxuan said details of the Cepa would be announced by the end of the month. The agreement is also intended to speed up cross-border trade and services. The Hong Kong government is hoping local manufacturers will either expand their production bases in Hong Kong or move part of their facilities back under a zero-tariff policy. Eden Woon Yi-teng, chief executive of the Hong Kong General Chamber of Commerce, earlier said that reducing export duties to the mainland would attract more foreign investors to Hong Kong. Some trade experts are worried that preferential terms for Hong Kong could have a negative impact on mainland cities such as Shenzhen. However, Mr Wang said Hong Kong manufacturers were unlikely to shift their production bases back to Hong Kong because tariffs only accounted for part of their costs. Shenzhen would still attract investors through its low production expenses, including labour costs. Another speaker, Benny Chiu Ling-bun, a research manger at HSBC China Services, also believed that Shenzhen would remain attractive to foreign investors. He said zero tariffs should not be the key issue for Cepa because not many Hong Kong industries would benefit from the incentive. Mr Chiu also questioned the motives for foreign companies setting up production in Hong Kong. 'If foreigners have an eye on the mainland's domestic market, they can directly invest in China, and that can also avoid custom duties.'