The new agreement builds on the first three stages of the trade agreement established in 2003 when Hong Kong was suffering a sharp economic slowdown due in part to the devastating outbreak of SARS that year.

The fourth phase of the Closer Economic Partnership Arrangement (CEPA), aimed at giving Hong Kong greater access to mainland markets, was signed by Hong Kong Financial Secretary Henry Tang and China's Vice-Minister of Commerce Liao Xiaoqi.

"CEPA has proved to serve as a platform and powerful engine for strengthening economic and trade ties between the mainland, Hong Kong and (the former Portuguese enclave of) Macau," said Jia Qinglin, the chairman of the Chinese People's Political Consultative Conference, in a trade and economic forum in Hong Kong.

The new provisions, effective from January 2007, will see a further relaxation of market access conditions in 10 areas including legal services, construction, tourism and air transport.

Hong Kong chief executive Donald Tsang said the Chinese authorities are also studying a further expansion of yuan business and transactions allowed in Hong Kong.

This would include allowing Hong Kong importers to settle their China bills directly yuan while Chinese financial institutions could issue bonds denominated in yuan on a pilot basis.