Beijing was quick to soothe concerns in Hong Kong about its rivalry with Shanghai after the mainland's commercial capital officially launched its free-trade zone yesterday.
Yin Zonghua, director of the international trade department of the Ministry of Commerce, told reporters the pilot run of the zone would have no negative impact on Hong Kong's future. He said the leadership would make further arrangements to deepen the economic relationship between the mainland and Hong Kong.
"Hong Kong has its own advantages that can help it play a big role in the Shanghai free-trade zone," Yin said. "The upcoming arrangements to consolidate the economic partnership will be of benefit to Hong Kong's long-term prosperity and stability."
The free-trade zone, modelled on Hong Kong, is a test bed for regulatory and financial liberalisation on the mainland.
However, the absence of top leaders at yesterday's opening, such as Premier Li Keqiang , a strong advocate of the zone, raised some eyebrows. Vice-Premier Wang Yang had been expected to officiate but he was also absent.
A no-show by top officials at the launch of the zone could be a sign of ambivalent support for the planned reforms from senior bureaucrats. Li had fought opposition to the zone from ministries and regulators overseeing trade and financial markets.
Also surprising by its absence was a widely expected reduction of corporate income tax for firms in the zone, which the national taxation authorities said yesterday would not be forthcoming.
A first batch of 36 firms, including Citibank and DBS, have received approval to set up business inside the zone.
The People's Bank of China said it would publish a detailed operating guide on major financial liberalisation in the zone, including full convertibility of the yuan and a market-based interest rate mechanism.
Among details released yesterday, Liao Min, head of the China Banking Regulatory Commission's Shanghai branch, said loan-to-deposit ratios and other regulatory requirements would be adjusted, and banks in the zone could receive deposits from abroad.