By ZHANG Xilong

(资料图片)

Guangzhou has issued two notices on the southern city’s financial opening up and innovation plan. The documents propose establishing a financial platform in the Guangdong-Hong Kong-Macao Greater Bay Area and greater facilitation of cross-border investment and financing.

The goal is to have a total asset size of 10 trillion yuan (US$1.5 trillion) in the banking industry in Guangzhou by 2025, with an annual premium scale of 180 billion yuan. It also aims to cultivate and develop securities, funds, and futures institutions among the top in the industry, and to create national trading platforms.

Nothing to write home about

Compared to other first-tier cities, Guangzhou"s financial industry has always been lukewarm.

Shanghai has national trading platforms such as stock exchanges, futures exchanges, oil exchanges, and gold exchanges. Beijing has the central bank, various financial regulatory headquarters, and private financial headquarters. Shenzhen has the stock exchange and cultural exchanges, as well as numerous financial institutions such as China Merchants Bank and Ping An Group.

In 2022, the added value of Guangzhou"s financial industry was 260 billion yuan, while Shanghai"s was 863 billion yuan, Beijing"s 820 billion yuan, and Shenzhen"s was 514 billion yuan.

Stability over growth

LUO Zhiheng, chief economist and dean of Yuekai Securities research institute, said that Guangzhou seeks economic development while considering other cities in the province and balancing the competition with Shenzhen. Therefore, the development of its financial industry has always focused on stability rather than growth.

It wasn"t until 2021 that Guangzhou welcomed its first national financial trading platform, the Guangzhou Futures Exchange, and in December 2022, the first product, industrial silicon, was listed for trading. The plan proposes accelerating the construction of a complete futures trading chain.

The plan also states that it supports the cooperation between the Guangzhou Futures Exchange and the Shenzhen Stock Exchange, the Hong Kong Stock Exchange, and major international futures exchanges to expand its influence.

On June 15, a spokesperson for the Hong Kong Stock Exchange said that the Hong Kong Stock Exchange invested 7 percent of the equity of the Guangzhou Futures Exchange in 2021, becoming the first overseas institution approved to invest in a mainland futures exchange.

Insuring a better future with local advantages

"Guangzhou"s financial development lags behind Hong Kong and Shenzhen, but the insurance industry has certain comparative advantages. With the establishment of the Guangzhou Futures Exchange, efforts are being made to focus on insurance, futures, wealth management, and asset management," said Luo.

In 2021, insurance premium income in Guangzhou was 146 billion yuan, accounting for 26.2 percent of the province.

According to the plan, a new insurance service center in Nansha will serve customers residing or working in the Greater Bay Area with Hong Kong and Macao insurance policies.

In addition, further integration of Guangdong, Hong Kong, and Macao will stimulate innovation of insurance products, with cross-border motor vehicle and medical insurance high on the agenda. The development of professional liability insurance products for lawyers, doctors, accountants, tax consultants, architects, and other professions that are aligned with Hong Kong and Macao will be a new focus.

Taking the lead in cross-border fund management

With its geographical location and policy advantages, Nansha has also become the preferred pilot for cross-border financial businesses. Previously, Nansha has hosted projects for Qualified Foreign Limited Partner (QFLP) and Qualified Domestic Limited Partner (QDLP) private equity funds. Seven fund management companies have obtained QFLP pilot qualifications, with a total approved quota exceeding 16.3 billion yuan.

The Free Trade (FT) account system in Nansha will take the lead in cross-border fund management, internationalization of the renminbi, and convertibility of capital projects.

Foreign exchange management reforms in Nansha will support overseas borrowing within certain limits, allow cross-border investment and financing in various currencies, and exempt domestic foreign-invested business from registration for reinvestment within the country.

RMB overseas investment funds by institutions from Guangdong, Hong Kong, and Macao may be established in Nansha. Raising RMB funds from domestic, Hong Kong and Macao institutions will be easier.

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