Economy is the body, finance is the blood. As one of the regions with the highest degree of openness and the strongest economic vitality in China, the rapid development of Guangdong, Hong Kong and Macao Bay area especially needs financial empowerment.
In May 2020, the people’s Bank of China and other four departments recently issued the opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay area, and launched five aspects and 26 measures to further promote financial openness and innovation and deepen financial cooperation between the mainland and Hong Kong and Macao.
Although affected by the epidemic, a number of important cross-border financial businesses in Dawan district have been implemented in an orderly manner. Recently, the channels of capital and bond markets have been expanding, and the “cross border financial link” and “southbound link” projects have been officially launched. More notably, under the background of financial technology empowerment, commercial banks quietly accelerated the integration of institutions in Dawan district.
In the view of insiders, the cross-border financial opening and cooperation between Guangdong, Hong Kong and Macao have formed a variety of modes such as market exchange, mutual establishment of institutions and mutual recognition of products. Next, promoting the opening of financial system will be the focus of the next stage of deepening the cross-border financial cooperation between Guangdong, Hong Kong and Macao.
account connection: from individual agent witness account opening to enterprise cross-border settlement facilitation
The construction of the bay area under “one country, two systems, three tariff areas and three currencies” has set an unprecedented precedent in the world. Specifically, one of the foundations for deepening the construction of financial infrastructure in Dawan District of Guangdong, Hong Kong and Macao is to promote the opening of bank accounts by individuals and enterprises in Dawan district.
Just a few years ago, when Hong Kong residents went to live, work and travel in the mainland, they had to exchange a certain amount of RMB cash in advance in Hong Kong. With the joint support of the regulatory authorities of the two places, various financial institutions seize the opportunity to launch various innovations in cross-border retail payment.
Since 2019, Hong Kong and Macao residents can open class II and class III personal bank accounts in the mainland through BOC Hong Kong or ICBC Macao through “proxy witness”. However, to open a fully functional class I account and trade investment and financial products, you still need to personally go to the relevant bank branches in the mainland for identity authentication. Previously, the central bank and others pointed out in the opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay area that the pilot of opening individual class II and III bank settlement accounts by Hong Kong and Macao residents’ agents should be carried out to optimize the bank account opening services.
The “cross border financial link”, which has just been online for two months, also involves the account opening process. The Hong Kong Monetary Authority requires that after verifying the qualification of Hong Kong investors to participate in beixiangtong, the Bank of Hong Kong shall open a new account for the investor and designate a special remittance account for beixiangtong. At the same time, according to the detailed rules for the pilot implementation of “cross border financial link” business in Guangdong, Hong Kong and Macao, mainland cooperative banks can open new RMB class I settlement accounts for Hong Kong and Macao investors in accordance with the current system.
For personal bank accounts, in September this year, pan Gongsheng, vice president of the people’s Bank of China and director of the State Administration of foreign exchange, said that he would continue to promote the implementation of various financial innovation measures in accordance with the principle of “combining distance with distance and giving priority to people’s livelihood finance”. In terms of people’s livelihood finance, we will use remote means to open mainland bank settlement accounts for Hong Kong and Macao residents on a pilot basis, and gradually expand the scope and scale of institutions; Facilitate Hong Kong and Macao residents to use mobile electronic payment in the mainland; We launched businesses that benefit people’s livelihood, such as direct payment of cross-border electronic bills for Hong Kong and Macao residents and self-service inquiry of personal credit investigation reports. These reforms and opening up in the field of people’s livelihood finance have greatly improved the convenience of people’s life in Dawan district.
Not long ago, at the fourth Guangdong, Hong Kong and Macao Great Bay Financial Development Forum, Liu Yingbin, vice president of the Hong Kong Monetary Authority, revealed that more convenience measures are being studied. One of them is to cooperate with the people’s Bank of China in the technical test of the use of digital RMB in Hong Kong, hoping to provide more payment options for residents of Guangdong and Hong Kong in the future.
In terms of helping enterprises with cross-border trade, investment and financing, relevant businesses are also constantly innovating. The opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay area requires to explore the establishment of an account management system suitable for the development of Guangdong, Hong Kong and Macao Bay area. Study and establish a domestic and foreign currency integrated bank account system suitable for the development of Guangdong, Hong Kong and Macao Bay area, and promote the facilitation of cross-border trade, investment and financing settlement.
Since July 2021, the central bank has officially launched the pilot of domestic and foreign currency integrated bank settlement account system in Guangzhou, Shenzhen and other four cities. As long as the relevant conditions are met, an enterprise can open a domestic and foreign currency integrated account with the same fund nature and different currencies, and open a multi currency settlement service to display domestic and foreign currency funds in one account, which will greatly save the time and cost of opening and managing accounts. In addition, individuals can also use and manage multi currency funds through a class I bank settlement account integrating local and foreign currencies.
Take an investment company in Shenzhen as an example. In the past, due to the needs of export foreign exchange collection and settlement, the company needed to open foreign exchange settlement accounts such as Hong Kong dollar, euro and US dollar respectively, with heavy workload in fund management and account verification. After the pilot, the company can meet the needs of multiple foreign currency capital settlement by opening a domestic and foreign currency integrated account. It is very convenient for overseas purchasers to use the same account.
investment connection: cross border financial link and bond southbound link were officially launched
In terms of market connectivity, the channels for Hong Kong and Macao investors to invest in the mainland capital and bond markets have been expanding. The “cross border financial link” and “southbound link” projects of bonds have been officially launched and put into operation this year.
After more than two years of preparation, on the afternoon of October 18, the financial regulatory authorities of Guangdong, Hong Kong and Macao announced the list of banks that have completed the pilot filing procedures of “cross-border financial link”. On the morning of October 19, the first batch of business pilots of “cross border financial link” in Dawan District, Guangdong, Hong Kong and Macao were officially launched. According to different investors, “cross border financial link” is divided into “North Link” and “South Link”. The banks with business pilot landing cover state-owned banks, joint-stock banks and foreign banks.
According to the detailed rules for the implementation of the “cross border wealth management link” business pilot in Guangdong, Hong Kong and Macao, beixiangtong investors can buy public securities investment funds with “R1” to “R3” risk levels in the mainland, or fixed income and equity public wealth management products with “level 1” to “level 3” risk levels, except cash management wealth management products. According to the business rules issued by Hong Kong and Macao financial regulators, the investable products of “Nantong” are mainly low-risk funds and bonds recognized by the Hong Kong Securities Regulatory Commission, as well as RMB, Hong Kong dollar and foreign currency deposits.
As the development dividend of Dawan District, cross-border wealth management service is another measure to broaden the cross market asset allocation of residents in Dawan district after QFII, stock link, fund mutual recognition and bond link. Cross border wealth management may be the first cross-border investment made by many individual investors in Hong Kong, Macao or the mainland.
According to the data of Guangzhou Branch of the central bank, as of December 15, the net outflow of Nantong was 80.2608 million yuan and the net inflow of Nantong reached 1497214 million yuan. As of October 19, 21 banks in the mainland had reported pilot banks, including 20 Hong Kong cooperative banks and 8 Macao cooperative banks.
Insiders said that the number and scale of accounts opened by beixiangtong in the early stage were about twice that of nanxiangtong, the same as expected. From the data, the number of “cross-border financial link” businesses between the mainland and Macao even exceeds the number of businesses between the mainland and Hong Kong. This is out of proportion to the permanent population of Hong Kong and Macao. Due to the impact of the epidemic, the normal “customs clearance” between the mainland and Hong Kong can not be carried out temporarily, resulting in the initial stage of the north-to-north link can only be carried out among stock customers.
More importantly, the investment demand has broad potential. With the continuous promotion of “cross-border financial link” in Dawan District, Guangdong, Hong Kong and Macao, many pilot financial institutions expect that more cross-border investment and financial products with investment strategies will be included in the scope of “cross-border financial link” in the future, so as to provide greater development space for individual cross-border investment in Dawan district.
On December 21, Chen maobo, financial secretary of the Hong Kong Special Administrative Region, said that the cross-border financial link allows qualified investors from the mainland, Hong Kong and Macao in the Dawan district to invest in investment and financial products sold by banks in the region. In the future, we should vigorously promote in this regard, broaden the content of products that can be sold and broaden the qualifications of investors.
Almost at the same time, another interconnection, bond link (nanxiangtong), was officially put into operation on September 24.
The bond link is mainly for institutional investors. On the basis of the previous bond link (North Link), the bond link (South Link) mainly provides a convenient channel for mainland institutional investors to invest in Hong Kong and the global bond market. From the preliminary pilot results, the participating investment institutions focus on heart bonds, Hong Kong dollar bonds, and Chinese dollar bonds above investment grade. In addition, when risk aversion is heavy, mainland local government bonds are welcomed by foreign investors, and domestic institutions also hope to bid through “Nantong”.
On October 11 this year, the Shenzhen municipal government issued 5 billion yuan of bonds in Hong Kong. The funds raised will be used for general government purposes, water treatment projects, sponge city related projects and clean transportation. The market responded enthusiastically, attracting 89 accounts from 8 different countries and regions to place orders. Investors from Europe, America and the Middle East accounted for 6% and oversubscribed 3.48 times. The Hong Kong Monetary Authority announced on September 27 that RMB, US dollar and euro bonds issued by local governments at all levels in China in the offshore market will be included in the joint venture qualified mortgage list of RMB liquidity arrangements from now on, which will help to increase the liquidity of these bonds and attract more international investors to add such point bonds to the investment portfolio.
With regard to financial connectivity, “the ‘cross-border financial link’ is just the beginning, and we look forward to continuously expanding and improving the plan through practice to further meet the investment and financial needs of residents in the region.” Chen maobo recently revealed that Guangdong and Hong Kong are working hard to follow up the proposal of the Hong Kong insurance industry to set up after-sales service centers in mainland cities in Dawan District, and strive to implement the “equivalent first recognition” policy for the insurance of Hong Kong cars entering Guangdong through the Hong Kong Zhuhai Macao Bridge at an early date.
credit connection: open cross-border loans and look for the Bay Area Unicorn
Last May, the people’s Bank of China and other four departments issued the opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay area, which proposed to support banks to carry out cross-border loan business. Support mainland banks in Guangdong, Hong Kong and Macao to issue cross-border loans to institutions or projects in Hong Kong and Macao under the framework of macro prudence. Support the branches of Hong Kong and Macao banks in the mainland to provide loan services for the construction of Guangdong, Hong Kong and Macao Great Bay area.
In addition, we support mainland financial institutions in Guangdong, Hong Kong and Macao to standardize the cross-border transfer of trade financing assets in accordance with the principle of commercial sustainability and on the basis of meeting the requirements of risk management. China will support one belt, one road, three yuan, and establish RMB overseas loan fund, and incorporate into the renminbi overseas fund business statistics, collect renminbi funds from mainland, Hong Kong, Macao and overseas institutions and individuals, and provide investment and financing services for Chinese enterprises to “go out” to invest and acquire, and help to build “one belt and one road”.
According to the data of Guangdong banking and Insurance Regulatory Bureau, as of the end of October this year, the loan balance of Guangdong banking industry supporting Dawan district was 19.46 trillion yuan, a year-on-year increase of 11.8%. In terms of insurance funds, by the end of September this year, the balance of insurance funds invested in Dawan district had exceeded 1.39 trillion, a year-on-year increase of 25%.
Enterprises are particularly optimistic about the development prospect of Dawan district. In early November this year, HSBC released a survey report on the business environment of Dawan district for overseas enterprises. More than half of the surveyed enterprises expect that the economic growth of Dawan district will remain ahead in China in the next three years.
With the accelerated economic integration of Dawan District, commercial banks with layout in Guangdong, Hong Kong and Macao began to integrate credit business in the three places to realize cross-border services for enterprises in the Bay district. Its advantage is that it can flexibly and efficiently arrange the credit fund plan in Dawan district and enjoy the cheaper financing cost in the region at any time.
On the other hand, with the acceleration of industrial upgrading in Dawan District, the traditional credit model can no longer meet all the financial needs of enterprises. The business model of high growth science and innovation enterprises is different from the traditional enterprises served by banks in the past, and their demand for financial services is also evolving. While new economy enterprises are changing the capital market ecology of Dawan District, scientific and technological innovation is also playing a far-reaching impact in many financial fields.
HSBC has established an industrial and commercial finance business team focusing on serving new economy enterprises such as science, innovation and medical treatment in Guangdong and Hong Kong, and successively launched “Dawan District +” technology credit fund and medical credit fund with a total amount of more than US $1.8 billion to provide financing support for new economy enterprises in the region in a critical development period. Among them, since its launch in June 2019, HSBC technology credit fund has provided credit financing support to about 50 new generation growth science and innovation enterprises in Dawan district.
“We hope to help Guangdong’s industrial upgrading and economic transformation by providing financing support for new economic enterprises in the region at a critical development stage. We look forward to growing together with Dawan district enterprises determined to become the next unicorn. If we can better combine financial services with scientific and technological innovation and build a ‘science and technology + finance’ ecosystem in Dawan District in the future, it will certainly produce surprising results Add reaction. ” Wang Liwei, CO chief executive of HSBC Guangdong and managing director of industrial and commercial finance, said.
interlinked systems: green finance promotes sustainable development
Dawan district needs to deepen financial reform and opening up to accelerate its integration into the new development pattern.
“We should promote the opening-up of Guangdong, Hong Kong and Macao’s finance from point to area and string beads into a chain, pay more attention to innovative exploration and integrated innovation, and take the lead in integrating and docking with international high standard rules.” Tong Shiqing, deputy director of Guangdong Provincial Bureau of local financial supervision, said at the fourth Guangdong Hong Kong Macao Dawan District Financial Development Forum. He said that for some new financial formats, if the system is not perfect, Guangdong, Hong Kong and Macao can timely strengthen communication and coordination, jointly formulate unified rules, form a “system scheme for Guangdong, Hong Kong and Macao Bay Area” and contribute to the “wisdom of Guangdong, Hong Kong and Macao Bay Area”.
Among them, green finance, which plays an important role in the construction of Guangdong, Hong Kong and Macao Bay area, is like a tenon and mortise, and has become the joint point of the system of Guangdong, Hong Kong and Macao. With the proposal of the goal of “carbon peak and carbon neutralization”, with its own industrial upgrading and financial industry advantages, Dawan district is expected to become the backbone of global green financial development.
For example, with regard to how to solve the problem of lack of standards for green finance, the local financial supervision bureau of Guangdong Province and other departments said in the implementation plan on implementing the opinions on financial support for the construction of Guangdong, Hong Kong and Macao Bay area that they should strengthen the coordination and cooperation in the research and formulation of green financial standards among Guangdong, Hong Kong and Macao, and strive to improve the green financial product system, certification system The evaluation system has launched a number of unified green finance related standards in Guangdong, Hong Kong and Macao.
For carbon emissions, the above plan proposes to fully rely on Guangdong’s carbon trading platform to carry out carbon emissions trading foreign exchange pilot and carbon finance business innovation, support qualified foreign investors to participate in the mainland carbon emissions trading in Guangdong, Hong Kong and Macao Bay Area in foreign exchange, and encourage foreign investors to participate in the mainland carbon emissions trading in Guangdong, Hong Kong and Macao Bay Area in RMB.
He Guofeng, deputy director of the Policy Research Bureau of the CIRC, also said at the above forum that Guangdong, Hong Kong and Macao are encouraged to unify green financial standards and enhance China’s voice and influence in the international green transformation.
As a manufacturing base in China and even the world, Dawan district brings together 80% of the country’s supply chain enterprises and more than 300 distinctive industrial clusters. The sustainable development of supply chain industry in Dawan district is not only the key to realize green development in Dawan District, but also will drive China’s overall industrial upgrading and low-carbon transformation.
“In the context of China’s promotion of the dual carbon goal, many enterprises hope to have more opportunities to support green and low-carbon development,” said Wang Yunfeng, President and chief executive of HSBC China. In recent years, the development of green finance in China has continued to accelerate, the regulatory authorities have continuously improved the top-level design, and financial institutions have also actively innovated. The financial industry is playing an increasingly important role in China’s process of achieving the dual carbon goal. Last year, the Bank launched the “carbon emission reduction incentive plan” in the mainland market to provide financial incentives for fixed asset loans for energy conservation and emission reduction projects for enterprise customers.
According to the report on green infrastructure investment opportunities in Guangdong, Hong Kong and Macao Bay area issued by the climate bond initiative, the total investment in major infrastructure projects in Guangdong Province in the 14th five year plan is expected to reach 5 trillion yuan, of which the green infrastructure investment is no less than 1.9 trillion yuan, including rail transit, wind power generation, modern water conservancy, ecological civilization construction and new infrastructure construction. At the same time, the infrastructure construction planning of Hong Kong and Macao is actively promoted, and the Great Bay area of Guangdong, Hong Kong and Macao provides great opportunities for international investors who pay attention to domestic green assets.
In the view of professionals, the unique international status of Hong Kong and Macao, combined with the developed financial system of Dawan District, has created the foundation and conditions for the development of green finance. The financial industry is an important “propeller” for the industrial development of Dawan district. Mainland cities in Dawan district can introduce a large number of low-cost funds from Hong Kong and Macao through green finance; Hong Kong and Macao institutions and funds can also play an important role in the mainland’s huge economic low-carbon development, and maintain and consolidate their unique position in international financial competition.
Wang Yao, President of the International Research Institute of green finance of the Central University of Finance and economics and Deputy Secretary General of the green finance professional committee of the Chinese financial society, told the media that Guangdong, Hong Kong and Macao Dawan district can push the green finance cooperation and development of Guangdong, Hong Kong and Macao to a deeper level through the coordination of regulatory authorities and the unification of green finance standards. The second is the innovation of products and services, especially the optimization and upgrading of products and services around the transformation and upgrading of local industrial structure. In fact, for innovative green bonds, green insurance, green funds, green trust and green financial leasing, Guangdong, Hong Kong and Macao Dawan district is a very good “test ground”, because the industrial foundation here is very good, which provides a starting point for the innovation of financial products and services.
(21st Century Business Herald)
