Date
20 August 2017
Shantou aims to attract overseas Chinese investment with a new economic and cultural cooperation zone. Photo: Bloomberg
Shantou aims to attract overseas Chinese investment with a new economic and cultural cooperation zone. Photo: Bloomberg

Shantou’s planned special economic zone may pressure Qianhai

Shantou’s planned trial economic and cultural cooperation zone, which aims to attract investment from overseas Chinese, will put pressure on Shenzhen’s Qianhai special economic zone to step up its act, economists said.

“There are quite a lot of overseas Chinese from Shantou and Chaozhou (another city in Guangdong province)… This could help attract more individual investment into the region than in Qianhai,” said Liao Qun, chief economist and general manager of research at China CITIC Bank International Ltd.

“The freer inflow and outflow of capital will be attractive to overseas Chinese investors,” Liao added.

While the new pilot zone may affect Qianhai, it is however unlikely to compete directly with the Hengqin special zone as the business focus will be different, according to experts.

Chinese media reported Wednesday that the State Council has basically approved the Shantou trial zone and that about 8.5 billion yuan (US$1.37 billion) will be invested to establish the infrastructure facilities.

The reports cited Shantou mayor Zheng Renhao as saying that the city will learn from the implementation and experience in Qianhai and Hengqin and other special economic zones. However, the focus would be on attracting investments from overseas Chinese, especially those who have migrated from Shantou and Chaozhou, he said.

The pilot zone will leverage the financial strength of 15 million Shantou and Chaozhou people living in in Southeast Asia and elsewhere. The municipal government will invite overseas Chinese individuals, leaders and businessmen to discuss the establishment of the zone in October, Zheng said.

Liu Ligang, chief China economist for Australia and New Zealand Banking Group Ltd., agreed that “there will be some pressure on Qianhai”.

“It is highly possible that the Shantou zone will see faster development than the Qianhai one,” Liu said.

As for Hengqin, it is not on the same playing field, he said. “We still are not sure whether Hengqin will focus on cultural development or entertainment business as it is so close to Macau.”

The planned Shantou zone will cover a total area of 36 square kilometers, with 20 square kilometers being reclaimed land, according to reports.

“It is not surprising to see the pilot zone proposal. As the policies implemented in the Shanghai free-trade zone are expected to be rolled out across the whole country, other areas will need to establish pilot zones to smoothen the transition,” Liu said.

On the policy level, Liao expects initiatives similar to what the Shanghai Free Trade Zone currently has, such as opening-up of capital account and freer yuan exchange and interest rates.

Liu added that trade between China and the Association of Southeast Asian Nations will get a boost, while the renminbi’s role will also be enhanced as an investment currency as the “focus of the zone will be on investment and financing”.

The Shantou zone will be developed in line with the country’s strategies, making it more convenient for overseas Chinese to invest back home. The city will push forward some pilot policies covering free trade, modern services, international energy and resources exchange, something similar to the Shanghai free-trade zone, Zheng said.

– Contact the reporter at [email protected]

RC

Ayishah Ma is a financial reporter on Greater China issues.

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