Qianhai - a small zone with a big role

The districtis at the forefront of yuan reform and touted as another Central, but other plans for its development have gone by the wayside

PUBLISHED : Tuesday, 29 January, 2013, 12:00am
UPDATED : Monday, 30 May, 2016, 5:01pm

Qianhai, in Shenzhen, may be the smallest of the dozen experimental zones on the mainland - which include Nansha in Guangzhou and Hengqin in Zhuhai - but its role is arguably the most significant.

Being chosen as the testing ground for freer yuan usage and capital account convertibility, the former backwater is now set to become the "Central of Shenzhen", or what officials bill as the "Manhattan of the Pearl River Delta".

In 1980, when Shekou was being developed into one of the mainland's first shipping and logistics ports, officials reserved Qianhai - a 15 square kilometre area on the bay in the western part of the city - as a potential backup development zone for Shenzhen's budding economy.

There were plans to turn the last piece of undeveloped land in Shenzhen into a logistics park or a cluster for high-technology industries, but eventually it was decided it would best serve the interests of both Shenzhen and Hong Kong for the district to operate an array of service industries, including finance, logistics, professional services and media as well as the hi-tech industry.

The State Council designated Qianhai as a "Hong Kong-Shenzhen modern service industries co-operation zone", and a high-level management authority, including officials from Hong Kong, Shenzhen and Guangdong province, was set up in 2010 to oversee its development.

Hong Kong was given the role of adviser and the task of proposing innovative financial services that could be launched there.

Yesterday, the district moved one step closer to its aspiration of becoming a "mini-Hong Kong" when 15 lenders in Hong Kong were given approval to provide about 2 billion yuan (HK$2.49 billion) of cross-border loans to companies in Qianhai.

Apart from building Qianhai into a new financial hub, Beijing sees it as a testing ground for possible reforms in the mainland's legal and accounting systems.

But the central government has stalled or rejected several experimental proposals, such as establishing new banks focusing on online banking, a commodities futures exchange, a reinsurance transaction centre and a pilot debt-for-equity scheme.

The Shenzhen government also rejected nearly all political reforms proposed for the area.

There were also other setbacks. A 50km, 20-minute rail link first suggested in 2008 to provide quick access between Qianhai and the airports in Hong Kong and Shenzhen was stalled indefinitely by fears of low utilisation.

The municipal government is set to inject 40 billion yuan by the end of this year into the Qianhai project, which is expected to generate a gross domestic product of 150 billion yuan in 2020.