China’s 12th Five-Year Programme should benefit Hong Kong companies, according to the Hong Kong Trade Development Council (HKTDC).
The ambitious development plan, which was passed at this month’s plenary meeting of the National People’s Congress, will shape major economic developments on the Chinese mainland between 2011 and 2015. At a media briefing on Wednesday, HKTDC chief economist Edward Leung said the new plan offers Hong Kong companies room to expand their mainland business.
The latest Hong Kong Export Index, which rose from 53.6 to 55.8 in the first quarter of 2011, signals faster export expansion in the near term, according to Leung. The index monitors the export performance and prospects of Hong Kong traders and is based on a quarterly business confidence survey covering major industries.
While indices for all major markets increased and stood above 50, a sub-index for exports to the Chinese mainland edged up to 54.2, and was likely to expand further, said Leung.
Asked about labour costs on the mainland, Leung said that 79 percent of manufacturers and traders had reported higher costs in the past quarter. Some 40 percent of those manufacturers said they would not be able to pass increased costs on to their overseas buyers. "The cost issue weighs on some Hong Kong companies," said Leung, noting that labour shortages and wage rises are likely to persist.
Mainland government estimates say demand for high-end products will surpass Japan by 2015, making China the largest luxury market in the world. Leung believed Hong Kong can take advantage by moving up the value chain and developing its own brands.
The new plan will speed up urbanisation, boosting demand for consumer goods and services. "Hong Kong services providers, even those in the beauty and education sectors, should accelerate their entry into the market," said Leung.
"Mainland city dwellers are now looking for high-quality services that can lift their living standards. They regard Hong Kong as a regional trendsetter and attach a higher preference to Hong Kong-branded services."
The new plan also calls for increased efforts to promote energy efficiency in the manufacturing, construction and transportation sectors, as well as stricter requirements on business and industry to meet emission standards.
"Other areas such as engineering, property management, brand consultancy and marketing can also offer tremendous opportunities to Hong Kong companies," said Leung, adding that Hong Kong companies can be competitive by capitalising on the Mainland and Hong Kong Closer Economic Cooperation Agreement.