A toast to CEPA: Premier Wen Jiabao is all smiles after the signing. He says the Central Government hopes it will bring more opportunities for Hong Kong businesses and growth to the Hong Kong economy.

The Central Government very much cares for Hong Kong's economic health, Premier Wen Jiabao told a gathering of senior officials, dignitaries and corporate titans following the signing of the Closer Economic Partnership Arrangement between the Mainland and Hong Kong.

The text of the arrangement covers trade in goods, services and investment facilitation, Premier Wen said. It is the result of 18 months of negotiations between the two sides.

"The basic objective is to phase out tariffs, and phase in the liberalisation of trade and investment," he said.

The Premier and Chief Executive Tung Chee Hwa witnessed Ministry of Commerce Vice Minister An Min and Financial Secretary Antony Leung sign the CEPA at a ceremony at Government House this afternoon .

Trade in goods is the centrepiece of the arrangement. Goods of Hong Kong origin under 273 categories will enjoy zero-tariff treatment in the Mainland market from January 1, 2004. These goods represent more than 60% of Hong Kong's exports to the Mainland.

More than 1,000 other categories of goods will come under zero-tariff treatment in the Mainland on January 1, 2006.

Services will also be exempt from tariffs beginning on January 1, 2004.

"CEPA is a special arrangement under 'One Country, Two Systems' and under the WTO framework," the Premier said. "It embodies a closer economic relationship with Hong Kong and the Mainland. It demonstrates the care and support for Hong Kong from the Central Government and the people on the Mainland."

He added: "We hope it brings more opportunities for Hong Kong businesses and growth to the Hong Kong economy."

CEPA is 'just the first step'

"CEPA represents only the very first step towards the closer partnership between Hong Kong and the Mainland," Mr Wen added. "We will keep up our study in light of new developments and update our policies and measures accordingly. We will step up our efforts to promote Hong Kong and the Pearl River Delta in particular."

Hong Kong's main economic problem is one of structure, which has grown to this magnitude after years of accumulation, he said. It is the reason for our high unemployment and ballooning fiscal deficit.

Faster development is the answer, according to Mr Wen. Hong Kong must play to its strengths. These include:

* having the world's most open free port;

* being a centre of international trade and shipping, with extensive economic links with the rest of the world;

* great infrastructure;

* a sound system of law; and

* support from the Mainland.

If Hong Kong continues to take advantage of these features, maintains its free economy status, upgrades its global competitiveness, "it will surely regain its vigour and splendour," Mr Wen said.

"Hong Kong's prosperity is the result of generations of hard and creative work by Hong Kong people under tough conditions."

He added: "I am convinced that nothing can stop Hong Kong's march towards greater progress. The pearl of the Orient will shine even more brilliantly in the future."