Business sectors in adjacent Hong Kong say 'win-win' pilot zone can sharpen their edge

The vision to transform Shenzhen to become the country's pilot zone for socialism has been applauded by various business sectors in Hong Kong, as the city is poised to reap the benefits by enriching the practice of "one country, two systems."

The Central Committee of the Communist Party of China and the State Council, China's Cabinet, issued the guideline on Sunday to support Shenzhen, adjacent to the Hong Kong Special Administrative Region, in building a demonstration pilot zone for socialism with Chinese characteristics.

Under the guideline, Shenzhen is vying to become a modern, international and innovative city by 2035 through boosting efficient flows of personnel, capital, technology and information between Shenzhen, Hong Kong and Macao, thus helping to better develop the Guangdong-Hong Kong-Macao Greater Bay Area blueprint.

"There are complementary opportunities for Hong Kong and Shenzhen in the area of technology and innovation industry, and Hong Kong can benefit from Shenzhen being the key pilot zone," Hong Kong Financial Secretary Paul Chan Mo-po said in a radio interview on Wednesday.

The city's finance chief added that "Hong Kong should ensure its advantages, including 'one country, two systems', keep ahead of the curve, and the city should not be afraid of competition".

"With the pilot zone vision, we hope Hong Kong and Shenzhen could strengthen communication at the government level, and through policy innovations, such as measures facilitating Hong Kong residents working in Shenzhen, to achieve deeper integration and win-win across the border," the Chinese Manufacturers' Association of Hong Kong said in a statement on Wednesday.

The guideline also aims for more mutual financial market access among Shenzhen, Hong Kong and Macao, and for Shenzhen to play more of a role in cross-border financial regulation. Shenzhen will be granted favorable policies, including privileges in renminbi internationalization. In addition, more reforms are envisioned in Shenzhen's Qianhai district in the modern services sector.

"Such policies are more a boon than a threat to Hong Kong－the city that stands as the largest offshore yuan center and has been well connected to the global capital markets," said Fielding Chen Shiyuan, the Hong Kong-based senior vice-president and economist at China Construction Bank (Asia).

Those experimental policies, just like the cross-border stock and bond trading links that have operated well for a couple of years between Hong Kong and Shanghai/Shenzhen, will further sharpen Hong Kong's edge as a world-renowned financial hub, Chen said.

As China charts a course for opening its capital account in a progressive manner, Shenzhen needs to find a partner to essentially get these pilot policies off the ground, and Hong Kong, being geographically and culturally close to Shenzhen, has what it takes to be the right one, he said.

"Riding high on the policies, Hong Kong looks to embrace a fresh new bout of business that capitalizes on its long-cherished advantages in the financial industry and unique status as the bridge connecting the Chinese mainland and the outside world," Chen said.

"The story is not about whether the rise of Shenzhen will make Hong Kong's advantages obsolete and abandon the city to its fate. Instead, it is all about Hong Kong and Shenzhen, a pair of cities that are highly complementary, joining hands to make a bigger cake of shared interest," he added.

Terence Chong Tai-leung, the executive director of Chinese University of Hong Kong's Lau Chor Tak Institute of Global Economics and Finance, envisions Hong Kong and Shenzhen striving to build a financial center targeting the Greater Bay Area.

"While Hong Kong could focus on the equity market, Shenzhen could eye the gold and commodities market to cement a comprehensive financial market in the region that can rival New York and London, thus boosting the financial service industry's talent flow in the region," Chong said.

In the innovation and technology sector, Shenzhen also offers many opportunities for Hong Kong entrepreneurs, said Simon Lee Siu-po, senior lecturer at Chinese University of Hong Kong's International Business and Chinese Enterprise Program.

Lee also expected there will be enhanced flow of talent across the border in such areas as the legal profession, risk management, event management and marketing.