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China plans new financial services region in GuangDong linked to Hong Kong -
China is going to annouce plan to establish GuangDong Province, together with Hong Kong, as an influential financial services region within 10 years.

The plan & a series of new policies will be announced during China President Hu's visit to HK this weekend.

Policy to boost Hong Kong
The policy announcement will mainly relate to boosting financial services, trades, education, science & technology, tourism, co-operation between HK and GuangDong Province, which is being planned to become an
influential international financial region within 10 years.
Particularly, financial services will be the main area of the policy announcement.  This will be in line with the push of internationalization of RMB and the "Go-abroad" policy - China is encouraging Chinese enterprises and HK enterprises to look for opportunities overseas.  It also demonstrates that China would like to rely on HK as the "off-shore" centre to spearhead China's financial services growth plan.

Main points of "boost"
The following features in the financial services policy will be announced to strengthen HK's position as a world financial centre:
- to allow third party (ie. non-HK and non-Chinese enterprise/party) to settle foreign trade and investment account in RMB in HK
- to release more off-shore RMB (investment/financial) products
- to allow long term investment in China's capital market from HK
- to set up joint Shanghai-Shenzhen-Hong Kong stock exchange office stock exchange transaction funds which can list on all three stock markets.
- to further facilitate the flow of RMB between China and Hong Kong

The plan for a new financial services region
To develop GuangDong into a new financial services region, the roles to be played by Guangzhou and Shenzhen are defined in a new financial services growth plan.
Guangzhou will mainly develop banking, insurances, and wealth management.  It is to be responsible for strengthening and allocating resources for financial market.  Shenzhen will mainly develop multi-layer financial markets and venture capital markets.  It is to be responsible for innovative development of financial services.

Experimental financial hubs
China decides to set up experimental financial centre in Shenzhen QianHai to test the liberalization of RMB swap in capital deals.
The scope of "financial services innovation" in QianHai will include the following areas:
1. internationalization of RMB
2. RMB financial services for different business disciplines
3. relaxation of financial control on RMB
4. establishment of RMB based financial market
5. collaboration of HK and Shenzhen financial services sector

Financial services to be developed in Shenzhen QianHai will include:
off-shore RMB lending, RMB funding of trade and investment, long & medium term bond issues

Apart from Shenzhen QianHai, other experimental centres will be set up in WanQin and NanSa, also in
GuangDong Province.

Some economists expect that the liberalization of RMB capital exchange will be completed sooner than 2020.  It is possible that RMB may be freely exchanged by 2015.

Source: HKEJ - 28.6.2012

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China plans new financial services region in GuangDong linked to Hong Kong

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