There is a need for improved connectivity and deeper financial cooperation among Mainland China, Hong Kong SAR, and Macau SAR as more and more international financial institutions looking to establish or expand businesses in the Greater Bay Area, consultancy Deloitte states in a new white paper.
According to Deloitte, the recently announced Hengqin Plan and Qianhai Plan includes measures for advancing the reform and opening up of the financial market, with Hengqin introduce innovative cross-border financial management schemes, with the “line management” model set to expand Macau’s free port space while promoting economic diversification in the SAR.
The long-awaited guidelines for the development of the nearby Hengqin island were unveiled on September 5 underlining the Guangdong-Macau joint administration for the area and setting up four main focus areas that will assist with Macau’s economic diversification away from gaming, namely technology and high-end manufacturing, Traditional Chinese Medicine (TCM), tourism and MICE, and finance.
The Master Plan mentions that the development of modern finance is an important breakthrough for the moderately diversified development of Macau’s economy, including the policy goal of “exploring the free inflow and outflow of cross-border capital and promote capital account convertibility in the cooperation zone.”
Meanwhile, today Deloitte released ‘Driving new development of the Greater Bay Area in the 14th Five-Year Plan period’, a white paper analyzing the role of the GBA in China’s new development pattern and recommending areas of strategic focus.
‘Combining the openness of Hong Kong and Macau’s markets with the Pearl River Delta’s industrial innovations is essential to building the GBA as an international innovation hub,’ Deloitte China Southern Region Mainland Managing Partner, Tom Kwok, says in the release.
‘The establishment of an innovative ecosystem surrounding the ‘twin innovation corridors and zones’ can enhance the coordinated development of city clusters and industries’.
Banks in Hong Kong, Macau and China’s neighbouring Guangdong province are preparing to launch regional investment products soon.
The investment options, dubbed the Wealth Management Connect programme, are part of a plan to allow residents to invest privately between cities in the Greater Bay Area, which encompasses those areas.
Individuals can invest up to RMB1 million (US$155,000) each in the scheme, which was first announced by China’s central bank on Thursday.
Deloitte suggests that GBA financial cooperation be deepened, and technologies leveraged to enhance regulatory coordination and connectivity, while the region should leverage key collaborative platforms for innovation, while establishing task forces to further coordinate and align policy standards across the three economies that give full play to the extended benefits of the free port regime.
The white paper also suggests approaches to overseas presences be made more flexible in combination with RCEP rules, including those on the cumulation of origin, and the development of a digital trade platform based on the GBA’s advantages in cross-border e-commerce.
‘Coordinated GBA development is a top priority that requires not only hardware connectivity, but also improved soft connectivity of different systems, customs, and jurisdictions. Be it bridging the economic gap between cities, boosting the flow of innovation factors, setting up cross-regional governance, or the integration of logistics policies, coordination must always be emphasized,’ Kwok states.