Just recently, two major industrial leaders have decided to join forces and set up China's first logistical fund in Qianhai, with China Railway Capital Management L.P. acting as general partner and China Logistics Co. Ltd. as investment adviser.
"By the end of October 2013, more than 2,642 enterprises, most of which were financial institutions, had registered in Qianhai with a capital of 205.1 billion yuan ($33.89 billion). The combination of the financial and logistical industries will have a significant impact," said Shu Dong, Vice President of Shenzhen Qianhai Development and Investment Holdings Co.
Moreover, information technology will also have a stronghold in Shenzhen. "A cluster of financial magnets have their roots in the city, like Ping An Insurance and China Merchants Bank. As China goes further down the path of modernization, old factories have been reclaimed and been replaced by Internet and e-commerce companies," said Yang.
Financial reform
On June 27, 2012, the State Council approved a package of 22 reform measures to push forward the development and opening up of Qianhai and decided to support it with pilot policies.
Revolving around the internationalization of the yuan, Qianhai has started cross-border, two-way yuan lending, issuing yuan-denominated bonds in Hong Kong and putting them into the Qianhai equity investment mother fund, promoting the backflow of offshore yuan, and introducing various financial institutions from Hong Kong. According to statistics from the Qianhai Authority, the zone's administrative committee, 30 of the top 500 multinationals, such as HSBC, Standard Chartered Bank and the Swiss Bank Corp. entered the zone, and cross-border loans hit 10 billion yuan ($1.65 billion) at the end of October 2013.
"Now, cross-border yuan loans are pretty appealing to Qianhai-based enterprises, for they are cheaper than those from domestic banks," Li Zhen, head of a Qianhai-based investment company, told China Comment, a magazine of Xinhua News Agency.
While the China (Shanghai) Pilot Free Trade Zone (FTZ) is widely recognized as a test field for the boldest financial reforms, some of the reform measures overlap those carried out in Qianhai.
"While the Shanghai FTZ stresses the opening up of the trade and investment sector, Qianhai lays a focus on the financial industry," said Wang, who believes the establishment of Shanghai FTZ will enlighten and encourage Qianhai to make further progress.
As opposed to the large number of enterprises already registered in Qianhai by October 31, 2013, Hong Kong companies only made up 5.78 percent, with a registered capital of 14.32 billion yuan ($2.37 billion).
He Zijun, Deputy Director and Spokesman of the Qianhai Authority, said that the enthusiasm of Hong Kong companies has been crippled in three ways. Firstly, the policy has not yet been promulgated to lower the rate of corporate income tax to 15 percent; secondly, supporting facilities have not been fully put in place and thirdly, there are uncertainties as regards land leasing.
Prospective FTZ
Neighboring Hong Kong and Macao, Guangdong is making preparations for the approval of its own FTZ by the Central Government, said Liu Wentong, head of the financial office of Guangdong Provincial Government, at the Seventh Asian Financial Forum held on January 13.
In the future, the Qianhai cooperation zone in Shenzhen, Hengqin New Area in Zhuhai and Nansha New Area in Guangzhou will generate a synergy as components of the Guangdong-Hong Kong-Macao FTZ, and a financial center with international influence will gradually take shape, said Liu, who suggested that the total financial assets of the three regions had exceeded 30 trillion yuan ($4.96 trillion).
He Zijun, Deputy Director for Qianhai Authority, suggested that Qianhai is in a good position to exploit profits from cross-border yuan business enabled by the cooperative economic circle, and destined to do a better job than ordinary FTZs.
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