Wider market opening planned for Guangdong

Further details have been released on the planned trial of new policies to foster cross-border trade settlement in renminbi in two pilots zones in South China's Guangdong province.

Senior officials have revealed the plans will include the creation of a new real estate investment fund, and see the securitization of individual housing mortgage loans in the province.

They also added that local private lenders will be actively encouraged to join the banking sector to better serve the economy.

The pilot project aims to boost the internationalization of the yuan and facilitate closer financial ties between the region and Hong Kong, while reducing risk of currency exchange rate fluctuation for local companies.

Zhou Gaoxiong, director of the finance affairs office of the provincial government, said the two newly revealed initiatives are included in an overall plan to "build a comprehensive experimental zone of financial reform and innovation in the Pearl River Delta in Guangdong", currently being examined.

He added the government will issue further details on implementing the plan, although no specific dates were given.

The plan was issued last month by eight central government departments including the People's Bank of China, the central bank.

The pilot zones refer to the Hengqin New Area in Zhuhai and the Qianhai New Area in Shenzhen.

The central government aims to build Qianhai into a "pioneering zone" for its financial industry opening-up, with an array of steps taken by the government to increase the international use of the yuan.

The policies, approved by the State Council will cover six sectors - finance, taxation, legal system, talents, education and medical treatment, and telecommunications

A trial on the reform of the insurance sector, for example, will be expanded from the city of Shenzhen to the eight other cities in the PRD.

Financial institutions will also be encouraged to develop inter-market and inter-sector business.

Zhou added that private capital will be encouraged to enter the financial service field.

Guangdong's private capital market is currently estimated to be worth more than 1 trillion yuan ($156 billion), more than 80 percent of which is used in the real economy, he said, adding it is underregulated but still under control.

Micro lending firms launched in Guangzhou late last month will be used to widen the loan access for small enterprises and lower their borrowing costs, he said.

He Xiaojun, deputy director of the Guangdong branch of the China Banking Regulatory Commission, said it will be encouraging private capital to join the banking sector to better serve the real economy.

He added that private capital now accounts for 29.3 percent stake of the commercial banks in Guangdong.

Zhou said also that qualified financial institutions and enterprises in Guangdong will be encouraged to go public and issue renminbi-denominated bonds and trust investment funds in Hong Kong.

Pilot moves will also be made in Dongguan for further financial cooperation with Taiwan, and with members of the Association of Southeast Asian Nations.

The financial services industry in Guangdong generated business worth 312.3 billion yuan last year, with total assets hitting 13.08 trillion yuan, Zhou said.