By Leo Zhang
The southwestern Chinese municipality of Chongqing and southern province of Hainan have both shown keen interest recently to develop offshore finance, hoping to lure more international business to drive local growth.
Huang Qifan, mayor of Chongqing municipality, said recently the weakest part of China financial strategy is offshore finance, which is currently at an opportune moment to grow as the country strives to develop offshore financial settlements.
Huang is a former vice mayor in Shanghai, taking charge of the city economic work. He was also a key member of officials that helped draft policies for the opening-up of Shanghai Pudong New Area in early 1990s.
hongqing is conducting trials in offshore finance and we e already made some breakthroughs, he was quoted as saying by financial media at a forum in Beijing in late February. e should give a top priority to the task. /p>
Chongqing has been revving up efforts to develop its financial sector as it aims to catch up with other municipalities like Shanghai and Tianjin. The city saw the opening of its first offshore financial account recently and it also has set up a joint venture with PayPal to develop an international financial settlement business for e-commerce.
International settlement for processing trade in Chongqing reached US$40 billion last year and is expected to reach US$90 billion to US$100 billion, Huang said. But He noted that more support is needed to develop offshore finance in China.
Huang said that the biggest banks in China have yet to start offshore financial businesses as the central government doesn deregulate the business to them. The existing procedures for offshore financial settlement also need to be streamlined and simplified, he added.
e should made offshore financial settlement process as easy, efficient and practical as those in Hong Kong and Singapore, Huang said. e should also lower tax on the offshore financial business. /p>
Jiang Dingzhi, governor of Hainan Province, said in early March that the island must reate favorable conditions to develop its offshore financial sector and is actively seeking such opportunities in banks.
Before working in Hainan, Jiang served as the vice chairman of the China Banking Regulatory Commission between 2005 and 2010. China State Council has said that it would support Hainan in developing offshore finance as part of a broader plan to create an international tourism island, but no detailed measures have been unveiled.
Jiang that a solid offshore financial industry must have a sound foreign-exchange system, well-established financial infrastructure, a big pool of financial professionals as well as participation of multinational groups and conglomerates.
urrently, Hainan needs to do a lot of work in order to start the (offshore) business, but we have to pave the way for that, Jiang told reporters on the sidelines of the National People Congress in Beijing early this month. e will take an active approach in conducting trials in some banking institutions. /p>
As part of efforts to develop financial infrastructure, Hainan has a goal this year to set up two rural commercial banks, restructure its provincial development bank, create a commodity market and promote private equity investment, according to Jiang.
