Qianhai in Shenzhen will strengthen cooperation with Hong Kong, while Hengqin in Zhuhai will strengthen cooperation with Macau.
The Chinese authorities have released new plans to develop Qianhai, a special economic zone in Shenzhen City, and Hengqin, an island in Zhuhai City, into “Cooperation Zones” under the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) plan.
The GBA plan was announced in 2017 to turn the Pearl River Delta into a world-class cluster. A detailed road map was published by the State Council and the Central Committee of the CCP in February 2019, which includes nine cities in Guangdong Province, Hong Kong and Macau.
According to the plans, Qianhai will be used to strengthen financial cooperation between Shenzhen and Hong Kong, with a focus on the cross-border use of capital, further opening of the capital account and greater connectivity of financial services between Shenzhen and Hong Kong.
It also supports qualified financial institutions to enable them to conduct cross-border securities investments and other business, including opportunities for mainland companies to use the Hong Kong and Macau markets to fund green projects.
It also examines new mechanisms for cross-border trade finance and international settlement and settlement. The cross-border use of RMB between Qianhai and Hong Kong is also being piloted.
Authorities will also actively promote innovation in financial institutions, financial markets, financial products and financial supervision, and ensure that comprehensive financial services are provided for consumption, investment, trade and technological innovation.
The Qianhai reform plan is published here.
Hengqin is used to strengthen the collaboration between Guangdong and Macau and bring Macau to a more diversified economy with a more developed and modern financial industry – also in areas like asset management, bond markets and finance leasing.
In Macau, multi-currency venture capital and private equity funds are being set up to attract foreign investment in high-tech industries, innovation and businesses in the Cooperation Zones. Authorities will support RMB cross-border settlement, including for venture capital and related investments and trading.
Barriers to entry for “Australian-funded financial institutions” are being lowered to allow banks and insurance institutions to set up in Macau.
The plan aims to strengthen the link between the financial markets in the Cooperation Zone and the offshore financial markets of Macau and Hong Kong. The authorities will also investigate the free inflow and outflow of cross-border capital and promote the convertibility of capital accounts in the cooperation zone.
Cross-border investment management and financing will also be explored while expanding the scope of cross-border asset transfers.
The reform plan for Hengqin is published here.
In a press conference on Thursday (September 9th), PBOC Deputy Governor Pan Gongsheng pledged support for Qianhai and Hengqin as the new cooperation zones.
He said Qianhai and Hengqin will test free trade accounts, cross-border transfers of credit assets, foreign debt relief, cross-border capital pools and cross-border investment policies for private equity funds.
“Going forward, the RMB cross-border business innovation pilot will be conducted in Qianhai, which will help expand the depth and breadth of Hong Kong’s offshore RMB business and cement Hong Kong’s position as the world’s largest offshore RMB market.”
Bonds, CCP, Cooperation Zone, Cross Border, Financial Leasing, Financing, GBA, Green Finance, Hengqin, Innovation, Investment Management, Pan Gongsheng, Payment, PBOC, Private Equity, Qianhai, Securities Investment, Settlement, State Council, Trade Finance, Venture Capital, Asset management