Hong Kong Special Administrative Region(SAR) government on Monday welcomed a cap on trips to Hong Kong by residents of neighboring Shenzhen city and vowed to continue curbing cross-boarder parallel trading.
China's Ministry of Public Security announced on Monday a new policy which stops issuing multiple-entry permit to Shenzhen residents and will instead issue one-visit-per-week permit from April 13.
Hong Kong's Chief Executive Leung Chun-ying said on Monday that the new entry scheme for Shenzhen residents is aimed at cutting back on parallel trading and he appreciated the central government 's new policy for understanding Hong Kong's current situation. The multiple-entry permit to Hong Kong SAR for Shenzhen residents was introduced in April 2009, which drew 1.47 million visitors from April to December that year and stimulated Hong Kong 's retail and tourism industries.
However, the number rose to 4.1 million in 2010, and 14.9 million last year, with increasing parallel trading problem complained by some Hong Kong residents living near the boarder.
According to the SAR government, the number of Shenzhen residents who visit Hong Kong twice a week amounted to 4.6 million last year, as much as 31 percent of the total visitors holding multiple-entry permit.
From the beginning of this year, occasional anti-parallel trading protests occurred in several regions near the border to Shenzhen, in which some Hong Kong residents clashed with Hong Kong police and visitors from the mainland.
Leung said the anti-parallel trading protests seriously impacted Hong Kong's status as an international tourism city. " Actually, much of the uncivilized protest actions that took place in the past months have been counter-productive as far as the SAR government's efforts are concerned," said Leung.
He said that it is not easy to adjust the policy and also expressed gratitude to the Guangdong provincial government and Shenzhen municipal government for understanding.
Hong Kong authorities will continue to crackdown on local parallel trading after the scheme kicks off, said the chief executive.
A spokesperson with the SAR government said on Monday evening that the SAR government welcomed the central government's new policy and will strive to rebuild Hong Kong's international image of a "hospitable city".
The new permit was proposed and submitted to Beijing by Hong Kong SAR government in June last year. The new policy does not apply to those who already hold a valid multiple-entry permit.
"It is now nearly one year since we put forward the proposal, the reason why it took nearly a year is partly because it is a major move, secondly there is unruly protest by certain members of our community...(which)increased the difficulty in our discussion with the central authorities, and hurt the feelings between the peoples of Hong Kong and the mainland," Leung said.
Leung said that Hong Kong's commerce and tourism authorities will launch a series of promotional campaigns to welcome tourists from around the world.
Gregory So, Secretary for Commerce and Economic Development, said on Monday evening that the Hong Kong Tourism Board will spend 80 million Hong Kong dollars (10.3 million U.S. dollars) in promoting tourism within the upcoming months.
In a report released by the Bank of America Merrill Lynch Global Research, the firm expected that the new policy will result in a 2.3 percent hit to Hong Kong retail sales growth this year, and therefore slash the retail sales forecast further to a 5.8 percent reduction year on year, from the original forecast of 3.5 percent.
A cutback in cross-border traffic is expected following the move, though some believe the new policy will only have limited impact on parallel trading.
Vincent Fang Kang, a lawmaker of Hong Kong's Legislative Council who speaks for the wholesale and retail sector, said that the new policy would "definitely affect" the retail sector but the impact was difficult to estimate for the moment.