"In Q4 of 2021, we asked respondents to share their views on the new Qianhai and Hengqin plans. By industry, financial sector topped the ranks to give the positive responses. Financial services respondents appeared more eager to expand their presence in Qianhai, while financial services providers were the keenest to expand to Hengqin," said Michael Zheng, Regional General Manager of South China and General Manager of Shenzhen Branch in Standard Chartered China, while having an exclusive interview with GDToday.
The above conclusion was according to Standard Chartered GBA Business Confidence Index’s quarterly surveys of over 1,000 companies operating in the Guangdong-Hong Kong-Macao Greater Bay Area (GBA), which are conducted in collaboration with the Hong Kong Trade Development Council (HKTDC).
According to the report at the 13th CPC Guangdong Provincial Congress, in the next five years, Guangdong will stimulate the collaboration of modern finance and professional services in Hong Kong and Macao with Guangdong's manufacturing industry and huge market, so as to enhance the industrial competitiveness of the GBA.
Standard Chartered has around 90 branches in 6 GBA cities, including Guangzhou, Shenzhen, Zhuhai, Foshan, Hong Kong, and Macao. In May, the Bank officially opened its GBA Center in Guangzhou. Earlier in February 2022, Standard Chartered Group announced to invest 300 million USD over the next three years into China related businesses, including GBA. "We hope to help our clients seize the opportunities arising from China’s continuous reform and opening-up, and will get more involved in GBA's financial innovation via the cooperation zones."
Cooperation zones attractive because of their pilot measures
According to his bank's survey, Michael revealed that many Hong Kong, Macao, and overseas investors had shown optimism towards Hengqin and Qianhai. He believed they would also be very interested in Nansha, as China released a new blueprint for the Nansha District of Guangzhou this month.
Last September, China issued plans for the Guangdong-Macao In-Depth Cooperation Zone in Hengqin and Shenzhen-Hong Kong Modern Service Industry Cooperation Zone in Qianhai.
Michael insisted that it was because of the pilot measures in Hengqin and Qianhai. For instance, domestic and overseas talent in Hengqin would be exempted from tax on what exceeds 15% of personal income. Meanwhile, enterprises that meet specific requirements are subject to the preferential corporate income tax rate of 15%. It will be implemented in Nansha, making the place more attractive to investors.
Meanwhile, 16 types of professionals, such as tax accountants from Hong Kong and Macao, can practice in Qianhai, which has removed many administrative obstacles to introducing talent. Hengqin has also launched a cross-border business registration service, allowing Macao enterprises to settle in the cooperation zone without leaving home.
Michael believed that the further development of the cooperation zones would attract more and more Hong Kong, Macao, and foreign investors.
Integrating financial services with Guangdong's manufacturing industry
Michael was impressed by the model of "living in Hong Kong and Macao while working in the mainland; doing scientific research in Hong Kong and Macao while transferring the achievements in the mainland," which was initiated in the report on the 13th CPC Guangdong Provincial Congress.
He thought that one of the advantages of the GBA is that it can connect Guangdong, Hong Kong, and Macao, realize cross-border collaborative innovation, and promote the more efficient transformation of scientific and technological achievements into industries. It will become a fertile ground for financial technology innovation and application and greatly help build GBA, a scientific and industrial innovation highland with global influence.
For instance, a sci-tech company can do the R&D in Shenzhen or Hong Kong and manufacture its latest products in other GBA mainland cities. Also, the company can quickly get global talent, investment, and professional services via Hong Kong.
In Michael's opinion, now the GBA has initiated lots of cross-border financial trails, such as the Wealth Management Connect pilot scheme and the multi-currency cash pooling pilot for multinational companies. It will significantly provide financial support to Guangdong's high-quality manufacturing development, which is Guangdong's essential task in the report at the 13th CPC Guangdong Provincial Congress. According to the report, Guangdong will continue to promote integrating financing and professional services in Hong Kong and Macao with its solid manufacturing industry and large markets in the province.
Michael explained that he thought the GBA has rapid economic growth, a large population, and strong policy support. For example, the government has committed to increasing the R&D budget to promote innovation and further accelerating the opening of financial markets, making the place more attractive to Hong Kong, Macao, and foreign investors. And it can help enterprises achieve a higher development vision.
Help Guangdong companies explore the RCEP market
As the Regional Comprehensive Economic Partnership (RCEP) officially came into force in January 2022, Guangdong companies have embraced more opportunities to explore the international market in RCEP member cities.
According to the report, Guangdong will continue to dock with high-standard international economic and trade rules such as RCEP, and take multiple measures to expand domestic demand, stabilize external demand, and improve its function of linking domestic and international dual circulation.
Standard Chartered is the only international bank with network in all 10 ASEAN countries and it recorded a 35 percent YOY China-ASEAN corridor network growth in Q1 2022, despite various challenges in the external environment. Michael indicated that the ratification of RCEP will attract more Chinese investments into ASEAN, and Standard Chartered is willing to help Guangdong companies explore the international market in these countries.