The Dream Factory of China

The financial industries in Qianhai look promising, with governments at every level offering support through favorable policies, and the valuable lessons that have been learned from previous experiences in Hong Kong. The next 10 years in the area will be a decade of down-to-earth practices, said Edward Chen Kwan-yiu, president of Qianhai Institute for Innovative Research.

Aligning its position as a modern demonstration of the innovative cooperation between Guangdong and Hong Kong to create a modern service industry zone, Qianhai is expected to pioneer unique financial services in China.

According to Chen — who is a well-known economist and director of multiple financial research groups in Hong Kong as well as an honorary professor at the University of Hong Kong and several Chinese mainland universities — Qianhai is in a unique position for developing China’s financial industries, when compared to China’s two other financial centers, Hong Kong and Shanghai.

“Qianhai is different from Hong Kong and Shanghai because the market in Hong Kong has been completely open, with sophisticated supervision systems, since the 1960s, and Shanghai is a financial hub aiming at global markets, while Qianhai is a trial zone that experiments with the latest and most innovative policies,” said Chen.

Compared to Shanghai, Qianhai is more open and bold in carrying out financial policies. Chen elaborated his point of view by using Qianhai’s unlimited cross-border Chinese-currency loans policy as an example.

Companies registered and founded in Qianhai, which have actual businesses and investments that borrow funds in Chinese currency from Hong Kong banks, can apply for settlement with Shenzhen’s banks or financial institutions.

“The most exclusive feature of Qianhai is innovation, so the area should try to bring more innovative policies into practice in the following years,” said Chen.

In the eyes of the economist, the greatest advantage Qianhai has is its geographic proximity to Hong Kong.

“Qianhai should make the best use of Hong Kong and learn from the experience it has gained over the past few decades as the one of the world’s most important financial hubs,” said the financial expert.

Chen said that Hong Kong has a rather open supervision system with a world standard, and Qianhai can adopt its valuable experiences to build a financial supervision system.

Just like the old saying goes, Rome wasn’t built in a day, and neither will the systems in Qianhai. To build more coherent and efficient systems for administration, talents and laws, Qianhai, as well as the companies with Hong Kong or foreign funds settled in the area, still need time to collaborate more harmoniously with each other in terms of procedures and cultures.

“Shenzhen and Hong Kong have been in touch and cooperating for nearly three decades in various fields, but there are still a lot of differences between the two areas,” said Chen, “so Qianhai also needs more time and more tolerance to accommodate for the difference in cultures.”

Chen said that the innovative and favorable policies available in Qianhai are beneficial for companies with Hong Kong or foreign funds who want to expand their businesses in China.

“It is a great advantage for these companies with the new policies available in the cooperation zone,” said Chen, but the challenge is how to work out long-term efficient ways of cooperating with the financial institutions on the Chinese mainland.

The economist suggested that a semiofficial working committee be set up to solve the actual problems faced by companies from different countries.

“The area not only needs high-end policies tailored by the Central Government, but also an organization that can solve civil problems and conflicts besides the legal issues that are to be dealt with by the arbitration center,” said Chen.