(Bloomberg) -- China’s financial regulators unveiled a sweeping plan to facilitate cross-border transactions and investments between Hong Kong, Macau and cities in southern China as part of the government’s ambition to transform the coastal region into a high-tech megalopolis to rival California’s Silicon Valley.
The People’s Bank of China (OTC:BACHY), together with the nation’s banking, securities and foreign exchange regulators, on Thursday announced a slew of potential measures to support the so-called Greater Bay Area, including allowing Hong Kong and Macau citizens to buy wealth management products issued by mainland lenders in the region and vice versa.
China’s policy makers are seeking to turn the area into a global innovation hub, boost infrastructure connectivity between cities and strengthen Hong Kong’s role as an international center of finance, shipping and trade as well as the center for the offshore yuan business.
The move comes amid increasing political tension in Hong Kong, with Beijing exerting greater influence over the city after almost a year of pro-democracy protests and as China has largely contained its outbreak of the coronavirus.
Hong Kong, Macau, Shenzhen and Guangzhou are the four key Bay Area cities, driving the region’s economic development, according to the blueprint announced earlier last year. HSBC Holdings Plc (LON:HSBA) has estimated the region -- with more than 67 million residents -- would encompass a trillion-dollar economy and eclipse Japan as the world’s fourth-largest exporter.
Other key points in the financial plan include:
- Supporting the offshore yuan business in Hong Kong and Macau and strengthening Hong Kong’s role as a global hub for the offshore yuan
- Setting up a futures exchange in Guangzhou
- Allowing the raising of yuan-denominated funds to support the Belt & Road initiative
- Testing a cross-border cash pool business
- Supporting cross-border bank lending
- Supporting payment service providers business expansion in Hong Kong and Macau
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