GBA poised to gain from RMB milestone

Cross-border renminbi transactions in South China's Guangdong province reached a record high of 7.39 trillion yuan ($1.02 trillion) in 2023, up 25.1 percent from the previous year, according to data from the provincial government.

This is a milestone achievement in facilitating smooth and efficient financial transactions across the Guangdong-Hong Kong-Macao Greater Bay Area.

Zhang Hu, executive vice-governor of the province, said the RMB has become the top settlement currency for cross-border receipts and payments in the GBA. Zhang promised further measures to facilitate the "seamless flow of diverse resources and elements" across the three regions.

"We are dedicated to intensifying efforts to eliminate barriers in investment, trade, qualification standards, and market access within the GBA," Zhang said in an interview to China Daily on Tuesday.

According to Zhang, Guangdong had issued several action plans over the years to promote regulatory alignment, mechanism and market integration, with a focus on key areas such as cross-border flow of resources, improvement of the business environment, and integration of public services.

Central to this effort has been the enhancement of financial market connectivity, which emphasizes expanding cross-border investment opportunities for Hong Kong, Macao and mainland residents and institutions, and steadily increasing the channels for residents to invest in each other's financial products, said Zhu Wei, deputy director of the Guangdong Provincial Development and Reform Commission.

Promoting financial interconnectivity of the GBA has not been easy because the growth engine of China operates under two different political and administrative systems, three separate Customs territories and has three different currencies as well as legal jurisdictions.

However, the introduction of the Cross-boundary Wealth Management Connect (WMC) Scheme in 2021 and its updated version in 2024 has helped to significantly increase the number of securities companies involved and RMB-denominated deposit products sold by mainland banks through the northbound leg of the WMC.

WMC allows eligible residents in the GBA to invest in wealth management products distributed by banks in each other's market through a closed-loop funds flow channel established between their respective banking systems.

Data from the Guangdong branch of the People's Bank of China, the country's central bank, show that about 71,000 investors have engaged with the WMC, with 46,000 from Hong Kong and Macao, and 25,000 from the Chinese mainland. The total value of funds transferred through WMC has reached 13.8 billion yuan.

"All these efforts had contributed to making Guangdong the first province in China to achieve a financial industry value exceeding 1 trillion yuan," Zhu said, adding that it will not only promote investment diversification and facilitate capital flow in the GBA but also drive RMB internationalization and strengthen Hong Kong's status as an international financial center.

In 2023, the financial industry's added value in Guangdong reached 1.24 trillion yuan, contributing 9.2 percent to the province's GDP.