Since reunification, the Government has made significant progress in developing and maintaining a cordial working relationship with the CPG and other Mainland authorities. Through a wide range of exchanges, including visits, meetings, seminars and training programmes, various bureaux and departments of the Government have enhanced mutual understanding with their Mainland counterparts. Some have also underlined the commitment of both sides to work together by cooperating in such areas as culture and the arts, postal services, marine conservation and the fight against intellectual property piracy.

The Hong Kong and Macao Affairs Office (HKMAO) of the State Council plays the role of facilitator and provides assistance to the HKSAR Government in developing official contacts with Mainland authorities. The Government also maintains close liaison with HKMAO on matters of mutual concern and arrangements for official visits made between the Mainland and Hong Kong.

Article 22 of the Basic Law provides that no department of the CPG and no province, autonomous region, or municipality may interfere in the affairs which the HKSAR administers on its own in accordance with the Basic Law. The HKMAO continues to play the role of a 'gate-keeper' to ensure that the Mainland authorities at all levels conduct business with the HKSAR in line with this principle.

The Government will set up the Mainland Affairs Liaison Office within the Constitutional Affairs Bureau in April 2006 to strengthen liaison with the Mainland and facilitate exchanges and cooperation with provinces/regions. The office will formulate overall strategies and the direction of cooperation between the HKSAR and the Mainland. It will also oversee general liaison work between the Mainland authorities and the Office of the Government of the HKSAR in Beijing and the Hong Kong Economic and Trade Offices (ETOs) in the Mainland.

The Government also plans to set up ETOs in Shanghai and Chengdu in the latter half of 2006 to further promote exchanges and cooperation with the eastern and the southwestern regions of China. In addition, the geographical coverage of the Guangdong ETO will be extended in April 2006 to include Guangxi, Fujian, Jiangxi and Hainan. Its functions will also be expanded to provide assistance to Hong Kong residents in distress in the five provinces/regions within its purview.

As the province closest to Hong Kong, Guangdong has the most extensive ties with the HKSAR. For 24 years, the Cross-boundary Liaison System has provided an effective mechanism for Hong Kong and Guangdong to discuss and resolve practical issues of mutual concern, including the fight against cross-boundary crime and the regulation of the Shenzhen River.

Cooperation with Guangdong was further strengthened with the establishment of the Hong Kong/Guangdong Cooperation Joint Conference (Joint Conference) in March 1998. It provides a high-level forum to explore and coordinate major initiatives in cooperation between Hong Kong and Guangdong. On September 28, the Eighth Plenary meeting of the Joint Conference was held under the co-chairmanship of the Chief Executive of the HKSAR and the Governor of Guangdong.

The two sides reached agreements on many fronts, such as stepping up coordinated efforts to ensure food safety, relaxing the 'one-truck, one-driver' requirement for cross-boundary freight vehicles to enhance the efficiency of the cross-boundary cargo flow, implementing progressively the Pearl River Delta (PRD) Regional Air Quality Management Plan and releasing the PRD Regional Air Quality Index daily, and strengthening cooperation in areas including infrastructure, supporting enterprise development, tourism, innovation and technology, education and culture.

The two sides also agreed to set up a new expert group on cooperation in informatisation, bringing the number of expert groups to 18.

In addition, the Hong Kong Guangdong Strategic Development Research Group continues to conduct research into subjects which have a significant bearing on Hong Kong/Guangdong cooperation while the Greater Pearl River Delta Business Council provides a forum for Hong Kong and Guangdong enterprise, trade and business associations to discuss ideas to enhance economic cooperation between the two places. The Chief Secretary for Administration and the Mayor of Shenzhen also co-chaired a cooperation meeting on September 5. The meeting reviewed the progress of work since the signing of a memorandum on enhancing cooperation between Shenzhen and Hong Kong and eight other cooperation agreements in June 2004. It also provided a forum for the exchange of views on cooperation in a number of areas, including control points, infrastructure, town planning, the implementation of the Closer Economic Partnership Arrangement (CEPA), science and technology, environmental protection, food safety and education.

Hong Kong takes a proactive part in promoting Pan-Pearl River Delta (PPRD) regional cooperation. Since the conclusion of the PPRD Regional Cooperation Framework Agreement in June 2004, progress has been achieved in various cooperation areas. Agreements on environmental protection, agriculture, intellectual property, education and anti-smuggling were concluded with other PPRD provinces/regions in 2005. A bilateral agreement on sports was also signed with Yunnan in May 2005.

The Government also organised study visits with PPRD partners to enhance mutual understanding. It conducted 10 outbound visits during the year and organised an inbound visit by representatives of PPRD provinces/regions. On September 28-30, 2005, the Secretary for Financial Services and the Treasury led a 70-strong delegation to Fujian Province to enhance understanding on investment opportunities in Fujian among Hong Kong investors, especially venture capitalists, investment bankers and entrepreneurs. The delegation also introduced Fujian to the advantages of raising funds in Hong Kong as an international finance centre.

The Hong Kong/Shanghai Economic and Trade Cooperation Conference was established in October 2003 by the HKSAR Government and the Shanghai Municipal Government to foster closer economic and trade ties, particularly to build on opportunities prompted by CEPA. The two sides agreed to strengthen cooperation in eight areas — airport management; ports and logistics; the Shanghai Expo 2010; tourism, convention and exhibition industry; investment and trade; professional personnel exchanges; financial services and education, health and sports. The two sides liaise closely on the implementation of these cooperative initiatives.

The first Hong Kong/Beijing Economic and Trade Cooperation Conference was held on September 2, 2004. The two sides agreed to strengthen cooperation on finance and trade, professional exchanges, education, culture, tourism, environmental protection and capturing the business opportunities prompted by the 2008 Olympic Games in Beijing.