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2 Shenzhen nuzzles closer to Hong
Kong By Olivia Chung
HONG KONG - After plenty of talk about
Shenzhen and neighboring Hong Kong joining hands
to form a twin-city metropolis, Shenzhen has
incorporated the idea into its development
blueprint for the period to 2020. This is the
first time the booming city in China’s Guangdong
province has taken economic integration with Hong
Kong into consideration in its long-term
development plan.
The draft blueprint,
drawn up in late November and to be sent to
the
State Council, China’s cabinet, for approval, says
Shenzhen and Hong Kong should turn themselves into
a twin-city financial, trade and shipping hub.
One of the priorities set in the blueprint
is to build a common capital market, with
Shenzhen’s financial institutions going
international through Hong Kong while more
financial institutions in the former British
territory could set up branches in Shenzhen as
their springboard to expand business in the
mainland. The two stock exchanges could cooperate
more closely to attract dual-listing of
enterprises home and overseas, the plan suggests.
As rosy a picture as the blueprint
depicts, analysts say there are heavy barriers to
be overcome before the plan can be actually
executed. For example, the Chinese currency is
still not fully convertible, which greatly
restricts capital flow between Shenzhen and Hong
Kong. Legal systems in the two places are also
radically different, so to build a common capital
market some common legal basis must be
established.
Nevertheless, the blueprint
indicates that a substantial step has been taken
toward this long-term goal.
Officials and
academics in Shenzhen have advocated integration
with Hong Kong for many years, though it was not
until August this year that Hong Kong reacted
positively, when a report by the Bauhinia
Foundation Research Center, a Hong Kong think tank
seen as closely linked to the government, said a
Shenzhen-Hong Kong metropolis could outperform
London, Paris, Chicago or Los Angeles by 2020.
Hong Kong Chief Executive Donald Tsang
also said in October in his policy address that
the territory will go all out to develop the
Shenzhen-Hong Kong twin-city international
metropolis.
The Shenzhen blueprint focuses
on six major areas - improving co-operation on
financial systems, building a Shen(zhen)-(Hong)
Kong Innovation Rim, improving cross-border
transportation, and enhancing co-operation with
Hong Kong in the high-technology and high-end
service industries.
To build the Shen-Kong
metropolis, the Shenzhen government reiterated in
its newly released draft regulation on developing
the financial industry that it was willing to
become ''the backyard'' of Hong Kong as the
region’s international financial hub. The draft
regulation was aimed at boosting Shenzhen’s
financial sector into ''a strategic pillar
industry'' of the city after high-technology.
According to the draft, Shenzhen will
create a multi-tier capital market, including a
main board, a small and medium-sized enterprise
board, a growth enterprise market, an
over-the-counter market and a bond market.The
draft also said the development of Shenzhen’s
financial market must be based on financial
co-operation between Hong Kong and Shenzhen with
the ultimate aim of it becoming ''an organic part
of the Shen-Kong metropolis and international
financial center'', as the backyard of Hong Kong
as an international financial hub.
''The
gradual realization of a collaboration of
financial industries of Shenzhen and Hong Kong is
not only a domestic demand for innovation for
Shenzhen financial industry, but also an
aspiration to become an international financial
center by Hong Kong, which cannot achieve it on
its own,'' the draft said.
''With its
condition, Hong Kong, on its own, finds it very
hard to become a world-level financial center,''
Julia Leung Fung-yee, executive director
(external) of the Hong Kong Monetary Authority,
said during a meeting in Hong Kong with Tang Jie,
vice director of the Standing Committee of the
Shenzhen Municipal People’s Congress. ''Only if it
enters into an alliance with the mainland, can it
achieve its goal with a combined scale and
efficiency.''
The creation of a
mega-metropolis would be a win-win situation for
the cities, according to Zhang Yuge, a senior
researcher with the China Development Institute, a
Shenzhen-based non-government think tank. Covering
3,200 square kilometers and with a combined
population of about 20 million, ``it could improve
infrastructure, trade and finance'' despite the
different political systems agreed to under the
''one country, two systems'' policy that undwrote
the 1997 handover by Britain of Hong Kong to
Beijing.
Tuan Chyau, professor of
department of decision sciences and managerial
economics of Chinese University of Hong Kong, said
that faced the risk of being marginalized, Hong
Kong should work for closer economic co-operation
with Shenzhen so the two cities could complement
each other with their peculiar competitive
advantages.
The mainland, with its runaway
development, is not only taking on Hong Kong as a
center for logistics and trade; it is attracting
Hong Kong’s business and talent.
In the
past, Hong Kong acted as a springboard to attract
international investors to China and as a
fund-raising center for mainland companies. Now
international firms can go directly to the
mainland and large Chinese state-owned companies
are encouraged to list at home following the
successful dual-listing cases of the mainland
companies such as the Industrial and Commercial
Bank of China in the A-share market on the
mainland and the H-share market in Hong Kong.
''A-share companies'' refers to those
domestically listed firms, which foreign investors
are not allowed to buy. H-share companies
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