Just three days before the World Health Organization lifted its travel advisory against Hong Kong and Guangdong on May 23, the Chamber led the first Hong Kong business delegation to visit Guangdong since the SARS outbreak.

While the Hong Kong Government is drawing up plans to revitalize the territory's economy, the Chamber believes that local businessmen should take the initiative to send positive messages to the international community that Hong Kong's business people remain active and, as such, business travel should be resumed.

The 25-member delegation, led by David Lie, Chairman of the Chamber's China Committee and Chairman & CEO of Newpower Group, joined by Chamber Vice Chairman Dr Lily Chiang, as honorary leader, and Chamber CEO Dr Eden Woon, met with the Guangdong Governor Huang Huahua, Guangzhou Mayor Zhang Guangning, and other senior government officials.

Mr Huang lauded the delegation for being the very first business delegation to visit Guangdong since the SARS outbreak. He said that with the SARS situation in Guangdong now under control, businesses were carrying on as usual, and he (then) hoped that the WHO travel advisory on Guangdong would be lifted soon. Mr Zhang also expressed that he believed the crisis would make both Guangzhou and Hong Kong stronger as the two cities found ways to turn the very challenging times into opportunities.

In terms of future economic development, Mr Huang said he believed that foreign investors trying to break into the huge Chinese domestic market were now eyeing investments in the Yangtze River Delta, whereas foreign investors interested in exporting globally continue to see the advantages of investing in the Pearl River Delta. However, he admitted that Guangdong needs to improve its hard and soft investment environment, and to provide better services to foreign investors if it wants to continue to be the leading region for investment in China.

The delegation took the opportunity during the trip to express some concerns that Hong Kong businesses' have in doing business with Guangdong. Members told Director General of the Department of Foreign Trade and Economic Cooperation in Guangdong Liang Yaowen that they hoped Guangdong could raise its tax refund quota to help businesses recover more of the VAT they have paid. Other key issues discussed included the possibility of further liberalising the banking sector and that foreign SME's be allowed to conduct international trade. Mr Liang also told the delegation that Guangdong is now allowed to authorise Mainland enterprises' overseas investment plan.

Despite the SARS outbreak, Mr Liang revealed that Guangdong's economy is growing at a steady pace. According to Mainland statistics, Guangdong's trade volume during the first four months of this year amounted to US$81.1 billion, an increase of 30.1 percent over the same period last year. Exports amounted to US$42.4 billion (up 28.1 percent), and imports reached US$38.6 billion (an increase of 32.4 percent). Contractual direct foreign investment from January to April 2003 amounted to US$4.2 billion[m6], up 35 percent over the same period last year. Realized direct foreign investment increased 28.5 percent, compared to the same period last year, to US$3.8 billion for the first four months.

Hong Kong is Guangdong's biggest trading partner. The province's exports to Hong Kong accounted for US$14.8 billion between January and April this year, representing an increase of 24.3 percent over the same period last year. Actual foreign direct investment from Hong Kong grew at an even faster rate of 33 percent for the same period.

On returning to Hong Kong, Chamber CEO Dr Eden Woon said: "Despite the SARS outbreak, the PRD region will continue to develop as the world's factory, services and logistics center. With the soon-to-be concluded Closer Economic Partnership Arrangement (CEPA) consultation, more opportunities for a closer integration of the Greater Pearl River Delta region exist, although in future this will involve closer cooperation affecting public health issues."

The SARS crisis has reinforced the importance of a proper integration between Hong Kong and the Pearl River Delta, and there can be little doubt that business exchanges and economic integration between the two areas will continue as usual. Close cooperation between Hong Kong and Guangdong is a key element among efforts to relaunch Hong Kong.