The Closer Economic Partnership Arrangement (CEPA), the Individual Visit Scheme and the Pan-Pearl River Delta initiative will bring great long-term benefits to Hong Kong, a leading mainland economist has said.

Eminent Economics professor Xiao Zhuoji, of Peking University. said this Friday at a an academic conference.

He advised Hong Kong investors to set their sight on the opening of China's western region this year because the central government might "offer preferential treatment to foreign investors in its drive to speed up economic development".

"The success of the '9+2' initiative and CEPA will bring sustained economic growth to Hong Kong in the coming years," he told reporters and guests at the conference.

Xiao, the director of Beijing Market Economy Institute, predicted a sustained economic development for China this year, with a projected GDP growth of 8.5 to 9 percent. He expected Chinese exports to grow by up to 3 percent. But, he said, the domestic market might be hampered by an oversupply of goods.

"In recent years, investment in production of all kinds of goods has increased rapidly but it has failed to stimulate enough demand in the domestic market to absorb this abundance of products."

Xiao said Chinese production would also face the problem of increasing costs of fuel and raw materials, which amount to 24 percent of the world's total. "China's economy cannot sustain its rising fuel costs over the long-term, and we must find new sustainable energy sources."

For the future of the Chinese property market, Xiao said it would continue to grow steadily in the near future, as the living conditions of the Chinese continue to improve, with an estimated increase of 1 billion square meters of residential living space within the next 15 years.

The economist urged the central government to help farmers relocate to the cities to reduce the poverty among rural communities.

"Farmers are suffering from dearth of land and lack of employment, resulting in poverty. The central government must help attract the rural labor force to the cities and provide them with opportunities to improve their professional skills, education and cultural levels," he said.
 
(Xinhua News Agency February 20, 2005)