Miao Yuexue, deputy director of the Department of Customs Control and Inspection of the General Administration Customs (GAC), told a press conference in Beijing on Tuesday that the GAC has exerted "comprehensive control" on parallel trading as part of a routine exercise since early this year. The emphasis is to clamp down on organized parallel trading activities.

Parallel trading not only creates a headache for Hong Kong residents, it hurts state interests by evading Customs duties.

The main reason for parallel traders buying and hoarding massive amounts of infant formula is the huge price difference between those sold in Hong Kong and the mainland. The hoarding frenzy will quickly subside if the GAC declares baby formula dutiable over and above a certain quantity or worth. The mainland Customs authorities, therefore, hold the key to eradicating the menace as there's no law in Hong Kong which specifically bans such activity.

However, all mainland residents coming to Hong Kong under the Individual Visit Scheme (IVS) should not be regarded as parallel traders. Since the scheme was launched nine years ago, 80 million visits have been made by mainlanders to the SAR under this scheme, and they have spent more than HK$630 billion in the city so far. It's a remarkable contribution that has been funneled to a host of service industries related to the travel industry, creating jobs and benefiting Hong Kong's economy.

Parallel traders, on the other hand, are not tourists, but smugglers by virtue of their intended purpose in coming here. According to Hong Kong Immigration Department, daily arrivals from Shenzhen have exceeded 600,000; while the number of parallel traders shuttling between the two cities is estimated at more than 20,000 daily. Among those visitors commuting between the two sides once a day, 95 percent are mainland tourists and the rest are parallel traders. But, the ratio is reversed among those who make multiple round trips daily, Hong Kong Customs officials say. According to Secretary for Security Lai Tung-kwok, the ratio between mainland and Hong Kong-based parallel traders stands at 4:6. Hong Kong residents must realize that the IVS must not be blamed for parallel trading.

This is an excerpted translation of a Wen Wei Po editorial published on Jan 30.

(HK Edition 01/31/2013 page9)