Published: 11:00, August 24, 2021 | Updated: 12:26, August 24, 2021
HK set to advance as yuan goes global
By Zeng Xinlan in Hong Kong

Huang Liuquan, deputy director of the Hong Kong and Macao Affairs Office of the State Council, speaks to the Legislative Council on Monday. (PHOTO PROVIDED TO CHINA DAILY)

Hong Kong is well-positioned to move forward the internationalization of the renminbi - a move that is crucial to the city's growth prospects as a global offshore renminbi business hub - with the support of the nation's 14th Five-Year Plan (2021-25), officials and industry gurus said on Monday.

Hong Kong's backing on the mainland and facing the world are the genes of Hong Kong's long-term prosperity and stability, and the renminbi is the bloodline of it.

Zhou Chengjun, director of the Finance Research Institute at the People's Bank of China

Speaking at a seminar at which a central government delegation explained the development plan, officials called for more cross-border synergy to overcome the regulatory and operational hurdles.

"I have full confidence in the implementation of the 14th Five-Year Plan," Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor said at the event.

The Federation of Hong Kong Industries said the 14th Five-Year Plan is a golden opportunity for Hong Kong's industrial community to play a more substantial role in converting top-tier research outcomes into commercialized products and solutions for Hong Kong, the Guangdong-Hong Kong-Macao Greater Bay Area, and the nation at large.

"We look forward to further opportunities on cross-border research and development collaboration and facilitative policies to encourage enterprises in developing advanced, high-value-added and innovation-driven industries across the GBA," the federation told China Daily.

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Pindar Wong, chairman of internet financial infrastructure consultancy VeriFi (Hong Kong) and chief architect of the Belt and Road Blockchain Consortium, told China Daily that the nation's history of making long-term continuous investments has laid a strong foundation for national pre-competitive research and technological development, adding that Hong Kong's short-term, market-disciplined focus will also complement the nation's 14th Five-Year Plan.

Zhou Chengjun, director of the Finance Research Institute at the People's Bank of China, said, "Hong Kong's backing on the mainland and facing the world are the genes of Hong Kong's long-term prosperity and stability, and the renminbi is the bloodline of it," adding that the capital market in the mainland has not been fully opened. "There are still certain restrictions on the flow of funds between the mainland and Hong Kong," he said.

Zhou said he expects the hurdles to be overcome soon. "But with the introduction of the mainland financial account opening and the acceleration of renminbi capital account convertibility, it's not hard to expect the day when the capital flow barriers are fundamentally removed to come soon," he added.

It's necessary to accelerate the opening of financial markets and further reduce capital account controls as financial transactions have become the main driver of renminbi internationalization, said Zhao Han, a banker at investment bank Goldman Sachs, suggesting stakeholders provide investors with a more friendly and convenient investment environment by improving the capital market opening-up system, simplifying the market entry process for overseas institutions, and integrating the entry channels.

Hong Kong Financial Secretary Paul Chan Mo-po wrote in his blog on Sunday that "the 14th Five-Year Plan outlines the direction of the country's development in the next five years and provides a clear path for Hong Kong's future development in innovation and technology, finance, legal and other professional services", adding that the financial services industry is the strongest segment of Hong Kong's economy.

"One of the major directions in the development of our financial industry is to expand the offshore renminbi capital pool and related investment products in Hong Kong, so that enterprises and institutions holding offshore renminbi funds can deposit, manage, deploy and invest in Hong Kong in a one-stop manner," Chan said.

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Steve Hopkins, co-founder of The China Guys and a Chinese financial professional, sees Hong Kong's natural role as an executor of the nation's key investment channels as being in line with the national blueprint of the 14th Five-Year Plan. "Hong Kong's role in the nation's campaign to attract foreign capital during this period of recovery has been remarkable," he said. "It has been integral in freeing the PBOC to stabilize markets with minimal central stimulus by introducing deepened liquidity into the domestic financial system."

Asset management firms also believe that the launch of such cross-border financial initiatives will continue to strengthen the city's role as an offshore renminbi center and the world's leading international financial center as supported by the 14th Five-Year Plan. "We believe the launch of the Wealth Management Connect Scheme is just a beginning of the further opening-up of mainland and capital market connectivity between Hong Kong SAR and the mainland," Hong Kong-based asset management company Value Partners told China Daily. It said that the recent launch of the MSCI China A-share index futures contract will serve as a useful risk management tool for offshore investors to take part in the A-shares market.