The triple attraction of preferential policies in the Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, Bonded Bay Area and the Free Trade Zone, is drawing an increasing number of Hong Kong companies to Qianhai. Figures for April show that some 100 new Hong Kong companies started operations in Qianhai - at this rate, Qianhai is expected to attract more than 2,000 Hong Kong companies by the end of this year.
By the end of May, there were some 1,414 Hong Kong companies in Qianhai, reporting a total of close to 222.3 billion yuan in registered capital, including major corporations such as Hang Seng Bank and HSBC. Compared to the 319 new Hong Kong companies that entered Qianhai over the same period last year, it is evident that the pace of such enterprises setting up operations in Qianhai has increased.
“There are many new businesses now in Qianhai, and the pairing of different policies, when taken as a whole, is producing unexpected positive results,” said He Longde, Director of the Division of Finance of Shenzhen Qianhai Authority He was speaking at a financial forum co-organised by Hong Kong’s New World Group and the Qianhai Authority on 8 May.
The finance sector is one of the key areas explored in fostering mutual cooperation between Qianhai and Hong Kong. Financial innovation - or avenues sought in creating new financial instruments, technologies, institutions and markets - undertaken by Qianhai, in particular, is of interest to the Hong Kong market. A report commissioned by the Qianhai Authority and relevant regulatory authorities revealed that 56.52 per cent of companies believe that the overall cost of cross-border renminbi loans in Qianhai is “slightly lower” than that in mainland China, and a further 26.09 per cent stated that they are “significantly lower than that in the mainland.”
Mr He pointed out that some of the main cross-border liquidity services provided in Qianhai include offshore financing and cash pooling of domestic and foreign currencies. In conforming with policy requirements companies can make use of the polices combined as below:
Combining a pilot scheme on foreign debt macro-prudential regulation, an approach taken to reduce system-wide foreign debt risks by financial institutions, with issuing cross-border renminbi loans. Should a Chinese-funded enterprise, equipped with registered capital of 1 billion yuan and good credit ratings, want to shore up 3 billion yuan of finances from overseas, the foreign debt macro-prudential regulation pilot scheme will allow it to pool the equivalent of 2 billion yuan in foreign currency, with the remaining 1 billion to be raised under the cross-border renminbi loan scheme.
Pairing a pilot scheme on foreign debt macro-prudential regulation with an approach to manage forex capital pool. Upon accounting for all foreign debt incurred by member companies, a multinational corporation can transfer funds into its RMB international main account – and, through a forex capital pool management approach, allocate these funds to its domestic member companies.
Coupling a cross-border renminbi loans scheme with an intra-group cross-border two-way renminbi pooling scheme. With the cross-border two-way renminbi pooling scheme, companies can pool their RMB loans overseas and directly transfer the loans to its domestic members via the scheme.
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