Wuhan financial reform plan submitted

The government of Central China's Hubei Province handed its financial reform and innovation plan for Wuhan, the provincial capital, to the State Council for approval Monday.

Liu Meipin, director of the finance office at the People's Government of Hubei Province, was cited in an Economic Observer report Monday, saying that the reform plan will focus on the development of small and medium-size financial institutions, the construction of a regional financial market system, and the utilization of Wuhan's advantages in advanced financial products.

The provincial government could not be reached by the Global Times as of late Monday for further comment.

Dong Dengxin, a professor of finance at Wuhan University of Science and Technology, told the Global Times Monday that Wuhan has abundant high-quality education resources and an advanced transportation network, which can be the foundations of further economic development and financial reform.

However, Dong said Wuhan is not as prepared as other cities in East and South China for making fundamental changes. "Wuhan's innovation environment and its economy lag behind compared with coastal cities. The financial reform plan could possibly end up being impractical," he said.

Wenzhou, in East China's Zhejiang Province, and Shenzhen, in South China's Guangdong Province, started on their financial reform plans last year.

While Wenzhou's reform focuses on developing financing platforms for its robust private sector, Shenzhen is paying more attention to developing currency-related innovations, because of its location as a neighbor to Hong Kong.

"Wuhan needs to figure out its regional competitive advantages, as Wenzhou and Shenzhen did, before conducting its financial reform plan," Dong said.

Several reform strategies suggested by the China Securities Regulatory Commission, including establishing a regional equity market and issuing private loans specifically for small and medium-sized enterprises (SMEs). are being tested in Hubei Province, Liu noted.

The Hubei government has been trying to attract private equity investment in companies in the province since 2011.

According to statistics cited by the Economic Observer report, Hubei had more than 280 private equity companies and related consulting firms, which had managed assets of 80 billion yuan ($13 billion) of capital and had made equity investments worth 15 billion yuan by the end of 2012.

Zhu Lixu, an analyst with Xiangcai Securities, based in Changsha, capital of Central China's Hunan Province, told the Global Times Monday that Wuhan might set up more privately owned banks and financing platforms to make borrowing easier for SMEs and the local government.

"To make the reform effective, Wuhan needs to support the establishment of private banks with clear lending areas, such as in information technology businesses or manufacturers of machinery components," Zhu said.

Zhu said Wuhan's plan is not likely to significantly benefit China's economic structural reform or the upgrading of its financial sector.

"Unlike the free trade zone in Shanghai, which could possibly try out interest rate liberalization and other vital and highly anticipated changes, Wuhan's reform will be more self-focused, so its influence will be limited," he said.