The China Securities Regulatory Commission is to open an office in the Qianhai economic zone in Shenzhen, an important step meant to aid financial reform in the country’s special economic zones.
CSRC’s move makes Qianhai the first among all such free-trade zones to have an office from a central regulator, stealing some limelight from the latest large reform push from Shanghai’s own FTZ.
The office will begin operations in the near future, according to Li Qiang, deputy director general of Authority Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen, on a Tuesday panel on Asian Financial Forum.
“To introduce regulators is to explore a more efficient cooperation and communication scheme in special zones, and push forward institutional innovation in both theory and practice for the financial regulation,” Li told FinanceAsia.
To be sure, some people may be disappointed by China’s special economic zones as their reform measures have been more delayed than expected.
For example, there is little development in setting up a scheme to allow cross-border renminbi flows within the special areas. And companies operating in Shanghai’s FTZ are complaining that the negative list — a list of forbidden businesses — is too long and they have little business to run.
And although some plans of the special economic zones are considered concrete in terms of details, they still remain pending - awaiting a green-light from higher-level officials, leaving those good-looking blueprints a mere fantasy.
“The establishment of a regulatory office may help to resolve the problem. The officials will work closely with participant parities in the zones and get the first-hand experience and information. They can more understand the businesses and improve internal communication,” said Li.
And Qianhai is set to introduce more financial institutions.
The FTZ will see two Hong Kong securities firms and one mutual fund owned by a Hong Kong financial institution start operation in the first half of this year, once the CSRC announces related policies according to the Closer Economic Partnership Arrangement (CEPA) between the mainland and Hong Kong.
Similarly, the zone is also ready to introduce brokerages and other type of financial firms from Taiwan when the Economic Cooperation Framework Agreement (ECFA) becomes effective.
It has strengthened its financial ties with the British Virgin Islands (BVI) by signing a memorandum of understanding (MOU) with it, and will sign another MOU on Friday.
“Qianhai’s goal is to become a financial innovation hub to weld Hong Kong and the mainland together,” said Li. He said Qianhai will, along with other economic zones, test reforms in renminbi internationalisation and interest rate liberalisation.
Qianhai economic zone, a special site of 15 sq km within Shenzhen, was first approved by the State Council in 2010. At the end of 2013, 3553 companies had registered in Qianhai, more than 60% of which are financial institutions.