Shenzhen’s Qianhai, labeled South China’s Manhattan in the making, is planning to pilot a cross-border yuan-loaning service between Shenzhen and Hong Kong, according to new financial reforms announced by the city government last week. The proposed reforms are still pending approval from the Central Government.
Shenzhen plans to allow its companies to take out yuan loans from Hong Kong banks and vice versa. The service aims to bolster the development of Qianhai by taking advantage of low-interest renminbi loans from Hong Kong banks.
The average one-year lending rate in Hong Kong is about 3 percent, while the one-year benchmark lending rate on the mainland is 6.56 percent.
Businesses and financial institutions in the 15-sqkm Qianhai in Nanshan District will be encouraged to issue yuan bonds in Hong Kong to raise funds for their development, the document said.
In addition, a State-level fund of funds for start-ups in emerging industries of strategic importance will be established in Qianhai.
By the end of this year, an over-the-counter stock exchange will also be set up in Qianhai, the first regional exchange of its kind in the country. Shenzhen is also planning to allow transnational companies to set up centralized treasury management agencies and global settlement centers in the city.
Qianhai, 15 square kilometers of reclaimed land north of Shekou, was written into China’s 12th five-year plan for 2011-15 as a testing ground of strategic importance.If you think China Watch Blog's information is useful, click on cup of coffee on left hand side and make a small contribution via PayPal