Economy May 15

China expands finance hub plan to bring HK closer to home

Greater Bay Area integration plan seeks to tie southern cities into financial hub as former UK colony sees resurgence of unrest

by Nadeem Xu
China boosts finance plan to bring HK closer to home
Protests in Hong Kong resumed after the coronavirus spread was contained.

(ATF) China is to provide more money to integrate the cities of southern China into a financial and innovation hub with Hong Kong and Macau.

The move, which will seek to closely knit the semi-autonomous cities with Guangzhou, Shenzhen and other Pearl River Delta industrial centres, comes as Beijing struggles to deal with anti-government protests in Hong Kong.

A financial support guideline for the development of the Guangdong-Hong Kong-Macuo Greater Bay Area (GBA) was issued on Thursday by the People's Bank of China (PBoC), the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchange.

Promoting the development of the GBA is a major strategic decision made by the Chinese government, and it is expected to have a significant and far-reaching impact on the reform and the internationalisation of China’s financial sector, the central bank said in a statement.

The proposals have been made as China’s leadership prepares to meet for the first time since Hong Kong was riven by violent protests against its Beijing-anointed local government and Chinese authorities.

In scenes at odds with the usually placid city’s harmonious reputation, the legislative building, metro stations and up-market shopping centres were attacked by Molotov-cocktail wielding demonstrators. While the coronavirus crisis subdued protests over the winter, the city’s success in containing the local outbreak has coincided with a resurgence of unrest.

China is bound by Hong Kong’s post-colonial constitution to refrain from direct involvement in the city’s political activities. But Beijing has taken a dim view of the local government’s inability to quell the disturbances.

The GBA guideline put forward 26 specific measures for five areas: 

·      Promotion of cross-border trade and facilitation of investment and financing; 

·      Liberalisation of the financial sector; 

·      Promotion of connectivity between financial markets and financial infrastructure; 

·      Support for innovation within financial services; 

·      Reduction of cross-border financial risks.

The move is hoped to deepen the mainland's financial cooperation with Hong Kong and Macau, enhance the role of the GBA in supporting and leading China’s economic development and provide strong financial support for building a dynamic and internationally competitive city cluster, the central bank said.

Chinese authorities in February last year unveiled an outline plan to develop the GBA into a role model of high-quality development.