An easing of restrictions on the amount of cash mainland Chinese tourists can take abroad will provide a boost to Hong Kong's SARS-battered tourism and retail sectors, economists and officials said.

China's State Administration of Foreign Exchange said Friday it will raise the amount Chinese holidaymakers can carry from 2,000 US dollars to 5,000 US dollars, starting September 1.

The move was timed to coincide with the start of a policy to allow residents from Shanghai and Beijing -- two of China's wealthiest cities -- to make visits individually to Hong Kong. Previously mainland Chinese tourist had to join tour groups to visit the city.

The latest move by Beijing to help revive the city's economy, particularly the tourism sector which was crippled by the SARS outbreak, was welcomed by officials and economists who forecast it would bring significant economic benefits to the city.

Henry Tsoi, senior economist for the Bank of East Asia, said the move would help stimulate retail sales in the city, which analysts estimate have plunged some 50 percent since the outbreak of the deadly SARS virus in mid-March.

"The decision to raise the limits will certainly be positive to Hong Kong because it will allow mainland Chinese tourists to bring in more cash and that will certainly boost retail sales here," said Tsoi.

June retail sales slumped 6.4 percent from a year earlier to 13.6 billion Hong Kong dollars (1.75 billion US dollars) after a fall of 11.1 percent to 13.8 billion dollars in May at the height of the SARS outbreak when shoppers stayed home and tourists kept away from the city.

The key retail sector is Hong Kong's second largest industry (after the import and export trade) in terms of sales turnover and number of employees. Retails sales in 2002 totalled 176.9 billion dollars.

Some newspapers estimated that the lifting of the cash restriction would help bring about an extra 40 billion Hong Kong dollars in tourism receipts to Hong Kong annually.

However, Tsoi said the figure was "overly optimistic".

"Each visitor spends on average 6,000 dollars. There may not be such a huge change in their expenditure because if they take more US dollars then they will bring less renminbi... I expect the majority of them will spend a bit more but wealthier visitors from Shanghai could bring a lot more cash," Tsoi noted.

Stephen Ip, economic development and labour secretary, has said the move to allow individual visits for mainland tourists from the southern Chinese province of Guangdong alone "will generate some 50 billion dollars in tourism income annually".

Residents of eight Guangdong cities were permitted to travel individually to Hong Kong under a new individual travel programme that began last month.

HSBC economist George Leung noted that Beijing's announcement had not relaxed the 6,000 yuan or renminbi -- China's currency -- limit that traveller's could take out of the country.

Nonetheless, he said the new changes would still help the city to revive its stagnant economy which official data showed on Friday had contracted 0.5 percent in the second quarter from a year earlier due to SARS.

"It's been a long-held complaint from mainland tourists that they're not able to bring enough money to spend in Hong Kong. If a whole family comes, the tourists will be able to bring even more cash," Leung told the South China Morning Post.

Financial Secretary Henry Tang told reporters that he "welcomed the easing of the limits. I'm aware that more renminbi is circulating in Hong Kong is good for the economy, but I also understand the country's (China) need for currency controls."

However, changes to the amount of renminbi travellers can take out of China could soon be forthcoming. The Beijing-affiliated Wen Wei Po daily reported that a scheme to revise the limit had already been drawn up.

The paper quoted sources as saying that they would not be surprised if the limit was hiked to 30,000 to 50,000 yuan -- a move which will have Hong Kong tourism officials and shop owners rubbing their hands with glee.

Visitor arrivals from China reached 6.83 million in 2002 -- or 41.2 percent of the total 16.5 million visitor arrivals who arrived in the territory last year.

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