The special administrative region has forged closer ties with Shanghai and other mainland cities a decade after Hong Kong's return to Chinese sovereignty.

From economic cooperation and mutual investment to exchanges in education and tourism, the new relationship provides opportunities and challenges to companies around the country and also brings changes to the lives of some Chinese people.

Starting today, Shanghai Daily business and metro reporters look back over the past 10 years in stories highlighting major developments in trade, investment, capital markets, finance and real estate, as well as education, human resources and tourism.

The first report discusses the impact of the Closer Economic Partnership Arrangement, a trade pact between the SAR and the mainland. Tomorrow, metro reporter Yan Zhen reviews education and human resources exchanges between Hong Kong and Shanghai.

A NEW round of the annual Hong Kong Toy Festival will kick off in Shanghai in August - an event that may owe its success to a historic trade pact signed between the special administrative region and the mainland in 2003.

The three-day show, featuring toy exhibitions, games and child-education lectures, attracted 30,000 visitors last year, including youngsters, parents, toy retailers and agents across the city.

Armed with stuffed bears and electronic telescopes, Hong Kong toy makers are understandably eager to attract consumers and business clients in the mainland market, which has already become the fourth-largest buyer of Hong Kong-made toys after the United States, Japan and Germany, according to the Hong Kong Trade Development Council, the event's organizer.

Here on the Chinese mainland, dozens of similar trade shows are playing out as the special region's trade development council works to help Hong Kong companies promote themselves and seek business opportunities across the country.

The results are encouraging, officials say.

Hong Kong's trade with the Chinese mainland rose to HK$2.35 trillion (300.8 billion U.S. dollars ) last year, up 13.9 percent from a year earlier, almost half of Hong Kong's 649.9 billion U.S. dollaes total trade volume during the period. Exports to the mainland grew 14.2 percent to HK$1.16 trillion, while imports expanded 13.7 percent to HK$1.19 trillion. Major exporting sectors include electronics, clothing, textile and toys, the Hong Kong Trade Development Council said.

"More frequent trade activities between the two areas were boosted significantly by the Closer Economic Partnership Arrangement, which allowed Hong Kong goods to be exempted from mainland entry tariffs," said Li Mingliang, an analyst at Haitong Securities Co.

Signed at the end of June 2003, CEPA grants Hong Kong companies advantages in trading with their mainland partners.

Implemented in three phases, the agreement eventually eliminated tariffs on all Hong Kong products starting in 2006.

The tariff-free treatment boosted mainland demand for Hong Kong goods in areas such as high-end fashion products, jewelry and upscale watches by making them more affordable. Government reports calculated that Hong Kong products cost 20 percent less as a result of the trade pact.

"CEPA helped drive the hotel, retail and real estate sector in Hong Kong while it also bolstered investment in the mainland and created more job opportunities here," Liao Xiaoqi, deputy minister of commerce, said during an online interview on Thursday.

Among its benefits, CEPA brought HK$9.2 billion in total investment to the Chinese mainland, between 2004 and 2006, creating 16,000 jobs for mainland residents.