ENG-2007 — Page 123

Financial and Monetary Affairs | 83

effective investment decisions. In July 2007, a web-based MPF Fee Comparative Platform was launched to facilitate comparison of fees and charges of MPF funds. New requirements to improve the content of annual benefit statements were introduced in November 2007 for implementation after the enactment of the Mandatory Provident Fund Schemes (Amendment) Bill 2007.

As regards the recent developments in the MPF legislation, please see the section 'Improvement of the Mandatory Provident Fund Schemes Ordinance' below.

Financial Links between Hong Kong and the Mainland

Hong Kong has long served as an international financial centre for the Mainland, helping Mainland enterprises to access international capital through its banking, equity and debt markets. Hong Kong's banks have also maintained a strong presence on the Mainland. The financial links between Hong Kong and the Mainland have been further strengthened with China's accession to the World Trade Organisation, which will, over time, generate increasing demand for a wide range of financial support services for the increasing trade and investment flows between the Mainland and the rest of the world.

The smooth and orderly development of renminbi business facilitates cross- boundary tourist spending in Hong Kong and helps promote economic integration between Hong Kong and the Mainland. Further development of renminbi business is expected to enhance the capability of Hong Kong's financial system to handle renminbi transactions, which is an important step in strengthening the status of Hong Kong as an international financial centre.

There has been a steady flow of cross-boundary funds among financial institutions in both places. Over the years, the Mainland has accumulated a substantial amount of funds in Hong Kong dollars from trading activities and inward investment. These funds are placed with financial institutions on the Mainland and are subsequently channelled back to Hong Kong through the inter-bank market.

By the end of 2007, Als' external liabilities to banks on the Mainland amounted to $508.7 billion, while their claims on banks on the Mainland totalled $305.8 billion. The amounts represented 20.7 per cent and 6.1 per cent respectively of Als' total liabilities to and claims on banks outside Hong Kong.

The use of cross-boundary links with Guangdong Province and Shenzhen continued to rise in 2007, reflecting increasing economic integration between the Mainland and Hong Kong. The daily average turnover of cross-boundary links (such as RTGS in Hong Kong dollars and US dollars; cheques in Hong Kong dollars, US dollars and renminbi) increased by 50 per cent to the equivalent of over $1.5 billion in 2007.

In light of the potential of the fund management industry on the Mainland, Hong Kong-based fund managers, who are recognised for their knowledge and experience in asset management, have successfully established joint ventures with Mainland fund managers. Hong Kong managers have also embarked on ways to enable investors to seize investment opportunities on the Mainland. At year-end,