Photo taken on November 28, 2022 shows the Guangdong-Macao In-Depth Cooperation Zone in Hengqin, South China's Guangdong Province Photo: VCG

South China's Guangdong Province will ramp up financial support for high-quality economic development, vowing to build an international financial hub in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA) with a focus on financial opening and innovation in Hengqin, Qianhai and Nansha, according to an action plan released by the Guangdong provincial government on Thursday.

As China speeds up its economic recovery this year, providing a good policy environment for cooperation in the GBA, the area has entered a phase of accelerated construction. 

The action plan will promote the integration of the Hong Kong and Macao special administrative regions (SARs) with the Chinese mainland, accelerating the two-way opening of capital markets and the internationalization of the yuan, experts noted.

Under the plan, the province will strive to attract 4 trillion yuan ($579.2 billion) of new social financing in 2023, with domestic and foreign currency deposits growing 10 percent, and domestic and foreign currency loans increasing more than 12 percent.

One of the province's key tasks this year is to deepen financial market interconnections within the GBA, with measures including expanding the business of the Shenzhen-Hong Kong Stock Connect and Bond Connect and promoting the early implementation of a Swap Connect.

Connect programs, which started in 2014, have created investment and diversification opportunities across asset classes for international and Chinese mainland investors, driven two-way capital flows between the mainland and international markets, and strengthened Hong Kong's role as a superconnector linking China and the world.

Guangdong will apply to China's Ministry of Finance for permission to issue offshore yuan local government bonds in Hong Kong and Macao, and support Guangdong enterprises to list in Hong Kong or issue bonds in Hong Kong and Macao for financing.

"The use of foreign funds is an important element of cooperation involving Guangdong, Hong Kong and Macao. For instance, the issue of offshore yuan local government bonds helps raise local funds and leverage foreign capital," Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times on Thursday.

Another highlight of the plan is to promote financial opening and innovation in Hengqin, Qianhai and Nansha.

Hengqin will accelerate the construction of a digital fence system, and the Macao banking and insurance sectors are encouraged to set up branches in the Hengqin Cooperation Zone. 

Qianhai will accelerate the construction of the Qianhai Shenzhen-Hong Kong International Financial City, and make it a pilot in the fields of foreign exchange management reform and yuan internationalization. 

The province will promote trade, investment and financing facilitation in Nansha, exploring the expansion of two-way financial opening and cooperation with Hong Kong and Macao in the capital market, green finance and other areas.

Dong noted that these targeted measures will promote the integration of the mainland with the two SARs through the GBA by taking advantage of local strengths and boosting growth.

"For instance, through financial cooperation, Macao can expand the geographical development space of its financial services industry in Hengqin, and Hengqin can absorb Macao's high added-value industries and attract talent," the expert said.

On February 23, 2023, the People's Bank of China (PBC), China's central bank, along with four other authorities, jointly issued two guidelines to provide stronger financial support for the construction and development of the Guangdong-Macao In-Depth Cooperation Zone in the Hengqin and Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone.

A total of 30 new measures will be issued for each region, covering a wide range of aspects from financial market interconnection and promotion of cross-border trade to strengthening financial supervision.

"Hong Kong and Macao are the frontier and bridgehead of China's economic opening-up, and using the advantages of the two SARs to carry out high-quality cooperation with the Chinese mainland may be an important step this year," Dong noted.

Shenzhen and Hong Kong funds can have more room for cooperation and development in the exchange business, and talent exchanges will also be the focus of cooperation, the expert added.

Global Times