Shanghai trade zone should aid 'real economy', not just banks: HKMA chief
HKMA chief says Shanghai should not just target financial companies
Hong Kong Monetary Authority chief executive Norman Chan Tak-lam said yesterday Shanghai's free-trade zone should benefit the real economy and businesses engaged in trade, and not just financial services firms.
"The establishment of the free-trade zone should be aimed at bolstering trade and serving companies," Chan said in Shanghai. "Financial liberalisation should not be implemented for the sake of 'just liberalising the finance sector'."
Shanghai launched the high-profile zone under a pilot scheme at the end of last month, with mainland officials saying it would be a testing ground for reforms mainly targeting the finance sector.
Full convertibility of the yuan and a market-based interest-rate mechanism are among reforms mooted for the zone, although the authorities have yet to publish detailed guidelines governing financial institutions' operations inside the zone.
Chan, who is leading a Hong Kong Association of Banks delegation to meet officials in Shanghai and Beijing, admitted that Hong Kong banks were still unaware of what they could do in the zone.
Citibank and DBS were the first two foreign banks to receive approval to set up branches in the zone, raising eyebrows among Hong Kong bankers worried that Shanghai was attempting to hurt Hong Kong by restricting its banks' role in the zone. Chan said several Hong Kong banks were in the process of applying for licences in the zone.
HKAB chairman Benjamin Hung Pi-cheng, the Hong Kong chief executive of Standard Chartered, said Hong Kong banks wanted to understand the policies regulating the zone before fully participating.
"The development of the zone wouldn't take just one or two days," Hung said. "With the publication of the detailed guideline, the banks would understand what businesses they can do and what they can't."
Speculation has mounted the free-trade zone has been overhyped. Jones Lang LaSalle said yesterday residential property prices inside or near the zone had jumped more than 20 per cent in the past two months, while CBRE said office rents in the zone had doubled.
Separately, the mainland securities regulator yesterday denied reports foreign firms would be allowed to float yuan-denominated shares in the zone.