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The Hong Kong Special Administrative Region (HKSAR) got a very "big gift" from the central government Sunday, after signing the Closer Economic Partnership Arrangement (CEPA) with the mainland.

Premier Wen Jiabao accepts flowers from a Hong Kong girl after he arrives in Hong Kong International Airport Sunday afternoon, June 29. [newsphoto.com.cn]

The landmark free trade deal comes on the heels of the sixth anniversary of Hong Kong's handover and is expected to provide a myriad of new opportunities for the SAR.

Premier Wen Jiabao and Chief Executive Tung Chee-hwa witnessed the signing of the free trade pact, endorsed by Vice-Minister of Commerce An Min and Hong Kong Financial Secretary Antony Leung at the Government House.

Under the agreement, the mainland will eliminate tariffs on 273 types of Hong Kong-made goods as of January 1, 2004. These types of goods account for 60 per cent of Hong Kong's exports to the mainland.

The mainland has also agreed to waive tariffs on all other Hong Kong-made goods by January 1, 2006.

The agreement opens up 17 sectors on the mainland, including banking and financial services, giving Hong Kong firms greater access to its rapidly growing market.

The basic objective of the CEPA deal is to bring about common development by upgrading the economic partnership between the mainland and Hong Kong.

The premier, who arrived in Hong Kong yesterday for the first time since he took the post in March, said that the "real big gift" he brought to Hong Kong was the firm resolve of the new administration that "the set policies of the central government towards Hong Kong will not change."

"We will unswervingly commit ourselves to the policies of 'one country, two systems', 'Hong Kong people administering Hong Kong', and 'a high degree of autonomy'," he said.

Addressing 260 guests from the business and academic sectors yesterday, Wen said the CEPA partnership represents the first step towards closer economic ties between Hong Kong and the mainland.

The central government would keep up efforts to promote economic integration between Hong Kong and the Pearl River Delta, he said.

Expressing his gratitude to the central government, Chief Executive Tung Chee-hwa said the pact would not only give Hong Kong new drive and advantages, but also help boost the people of Hong Kong's confidence in overcoming difficulties and building a bright future.

The premier said he had always closely followed the development of Hong Kong and understood that the main problem of its economy was a structural problem, which had grown to its present magnitude after accumulating over many years.

"The key to fundamentally solving Hong Kong's economic problems lies in rapid development," Wen said.

Wen urged Hong Kong to make better use of its unique advantages, rework the structure in place and optimize local industries, particularly the service sector.

"I am convinced that nothing can stop Hong Kong from marching towards greater prosperity and progress," he said. "Hong Kong, the proud pearl of the motherland, will shine even more brilliantly in the future."

During the speech, Wen also gave a brief introduction to the country's economic development.

He said the outbreak of SARS had not and would not reverse the general trend of reform, nor would it disrupt the opening up and modernization of China.

Wen said he was confident that China would achieve the 7 per cent economic growth target that had been set for this year.

The premier went on to say that the central government had taken the initiative to contain the aftermath of the SARS outbreak and maintain a rapid and sound economic development.

The measures in place included expanding domestic demand and readjustment of the economic structure, as well as taking an overall and coordinated approach for balanced development, promoting employment and improving the standard of living.

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