Opinion | It's either boom or bust for Qianhai investors
Hongkongers have long had their eyes on the development zone, but is it all it's cracked up to be?
Will Qianhai become the "Manhattan of the Pearl River Delta", or will it become just another property project like countless others in southern China? That's the million-dollar question that many local bankers and brokers want to know the answer to.
Hongkongers have had their eyes for some time on the Qianhai development zone, which the Shenzhen government in 2010 vowed to turn into a financial hub rivalling Manhattan. The 15-square-kilometre special zone, a reclaimed area located west of Shenzhen, is only one hour by car from Hong Kong.
Besides its proximity, Hong Kong lenders have to take Qianhai seriously because Beijing in June announced it would use the special economic zone as a test ground for yuan capital account convertibility and cross-border yuan lending.
Sounds good, right? This is why 37 firms - including HSBC, Bank of East Asia and Bank of Tokyo-Mitsubishi UFJ - last month all signed a non-binding agreement of interest to invest in Qianhai. In addition, seven local brokerage bodies are arranging tours to visit the area to identify opportunities.
But let's not to get carried away. Firstly, Beijing has not yet announced any details of the test ground for yuan capital account convertibility so we can only use our imagination on how far it will go.
What Beijing considers a big breakthrough may only to those in the West be a baby step towards liberalisation. Beijing in June said it would offer lower taxes to attract companies, legal and financial firms and talent from Hong Kong and elsewhere. This may not be enough of a lure as Hong Kong tax rates are already low and Singapore and many markets offer tax incentives.
