HK wants deeper integration with mainland

Political advisers and national legislators from Hong Kong have called for deeper integration with the mainland economy, based on the pilot programs including the Guangdong Free Trade Zone and the Stock Connect. [Special coverage]

"I am looking forward to free capital flowing between Hong Kong and Guangdong under the FTZ program. According to my understanding, free trade account has been realized in the Shanghai FTZ, and the model can be replicated," said Christina Cheung, director of Hong Kong-based South China Holdings, and a member of the National Committee of the Chinese People's Political Consultative Conference.

Based on the nation's boldest trial to partly open its capital accounts in Shanghai FTZ, companies can move funds efficiently through a two-way channel between its offshore entity and the unit inside the FTZ. Prior to this, almost all of the cross-border fund flows needed prior approval from the State Administration of Foreign Exchange.

"The Guangdong FTZ will be much larger in area than the Shanghai FTZ. If similar proposals are approved, I am considering relocating my toy and shoe factories into the FTZ, which will largely facilitate my business," she said. Cheung operates three listed companies and also has a stock brokerage, manufacturing units and real estate, tourism businesses.

The central government in December officially approved the Guangdong Free Trade Zone, a 931.385-sq-km area covering Qianhai in Shenzhen, Hengqin in Zhuhai, Nansha in Guangzhou, together with Baiyun Airport Comprehensive Bonded Zone, also in Guangzhou. The FTZ is expected to further strengthen cooperation and exchange between Guangdong and the Hong Kong and Macao special administrative regions.

Cheung said that the majority of the companies' assets and investments are in the mainland, and she has faith in the mainland economy.

"Some people were speculating that Li Ka-shing's decision of shifting the incorporated base of his two main firms to the Cayman Islands from Hong Kong suggests losing faith in the mainland economy. But I think it is quite normal," Cheung said, noting 70 percent of Hong Kong's listed companies are registered in the Cayman or Virgin islands, for tax and corporate deal convenience.

Cheung is not alone with her petition. CPPCC National Committee members and the deputies to the National People's Congress from the Democratic Alliance for the Betterment and Progress of Hong Kong also proposed opening the Shenzhen-Hong Kong Stock Connect as soon as possible, as well as expanding the tradable products from eligible shares to futures, commodities and derivatives under the Stock Connect program, as well as expanding the cross-border renminbi lending pilot program under the Guangdong FTZ.

"We would strengthen the exchange and cooperation between the mainland and Hong Kong and Macao. And we believe the special administrative regions will maintain long-term prosperity and stability, as their competitiveness has improved with support from the central government," Premier Li Keqiang said while delivering the Government Work Report on Thursday.

He said in his speech that the long-expected Shenzhen-Hong Kong Stock Connect program will be kicked off at "an appropriate time".