China’s southern Guangdong province is studying a plan to set up a regional free trade zone with neighboring Hong Kong and Macau to boost growth in the Pearl River Delta area.
A committee has submitted the proposal to Beijing, where a final plan will be decided by the central government, Zhu Xiaodan, governor of Guangdong province, said at a briefing today. The Guangdong-Hong Kong-Macau zone will be regional, compared with the international focus of Shanghai’s free-trade zone, Zhu said.
“We are still studying the details of this plan,” Zhu said. “It will involve trade services, ease of investment and innovation in management to boost cooperation with Hong Kong banks.”
The State Council approved the Shanghai zone in July, billed as the nation’s first free-trade area on 29 square kilometers (11 square miles) of land in China’s commercial hub. The plan has raised concerns in Hong Kong that the special administrative region’s status as a center for Chinese companies to raise capital will be eroded.
“Competition is not just about how good you are or have been, but more about whether you are better than your competitors,” Norman Chan, chief executive of the Hong Kong Monetary Authority, said at a Sept. 6 forum in Hong Kong. “It’s no good for Hong Kong to sit on the laurels and just hope or pray that other financial centers do not or cannot catch up.”
Zhu said he exchanged views about the Guangdong free-trade zone with Hong Kong Chief Executive Leung Chun-ying and the area will take advantage of Hong Kong’s position as a financial hub to bolster regional economic growth.
“Hong Kong needs to meet the opportunities and challenges brought by China opening up,” Leung said at today’s briefing. “As China further liberalizes its markets to the international market, to Taiwan, we should actively participate.”
A draft plan seen by Bloomberg News says the Shanghai zone will allow freer yuan convertibility, liberalize interest rates and relax restrictions on foreign investment, as Premier Li Keqiang seeks sustained growth at the world’s second-largest economy.
An opening ceremony for a Shanghai free-trade zone to test economic reforms is planned for this month, with Li set to officiate, two people with knowledge of the matter said.
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