Hong Kong fightback urged as new zones blunt edge
With yuan reforms focused on Shanghai and Qianhai, analysts say the city could deepen connections with both centres, but risks are high
Beijing's experiment with freer transfer of the yuan in Shanghai and Qianhai could spell the end of Hong Kong's pre-eminent role as China's international financial centre, analysts warn.
The only way to stave off the challenge from Shanghai, some suggest, is for Hong Kong to team up with Qianhai.
Senior central government officials will be in Shanghai on September 27 for the launch of its free-trade zone, designed to be at the vanguard of the mainland's drive for wider convertibility of the yuan and freer, market-oriented interest rates.
In June last year, Beijing also earmarked Qianhai, in western Shenzhen, as a testing ground for freer transfer of the yuan. It is offering tax and other incentives to attract Hong Kong and international firms and talent.
Hong Kong Institute of Directors chairman Kelvin Wong said Hong Kong would face pressure from both Qianhai and Shanghai. "If Beijing grants a lot of special incentives for international firms to go and set up in Qianhai or Shanghai, some companies may consider they would be better off to invest in the two cities to enjoy the incentives," he said.
Wong said that when international investors had more choice of cities in which to invest, they would inevitably reduce their investment in Hong Kong.