The tricky business of trading places, thanks to Hong Kong-mainland Cepa deal

A decade ago, Causeway Bay was a tourist hot spot with a thriving array of boutiques, wonton noodle shops and decades-old bakeries amid the glitzy shopping malls. Shoppers who were not speaking Cantonese were likely to be conversing in Japanese or English.

Today, the language most often heard is Putonghua. Mainland tourists predominate, pulling wheeled suitcases and splashing their stacks of money on gold ornaments, diamond rings, Rolex watches, Gucci handbags, baby formula, cosmetics and electronics.

The sweeping changes in Causeway Bay are one of the most visible signs of the effects of the Closer Economic Partnership Arrangement (Cepa), a free-trade agreement between the central government and Hong Kong signed a decade ago this month. The deal, agreed in the wake of the severe acute respiratory syndrome outbreak that left Hong Kong on its knees, was intended to pry open the expanding mainland market for Hong Kong businesses.

As part of the agreement, which has since been expanded, mainlanders from some regions were able to travel to the city individually, rather than in tour groups. Hong Kong banks have been able to set up branches across the border and law firms establish representative offices. Hong Kong accounting firms and telecommunications services providers will be allowed to operate in the new border district, Qianhai, on a trial basis.

"Overall, Cepa has been helpful to Hong Kong," Hong Kong Brand for China Market Association chairman Andy Lee Chi-hung said.

"It injected much-needed life into the city when Sars nearly [floored] the economy."