On the eve of Chinese President Xi Jinping’s trip south to celebrate the 40th anniversary of the establishment of Shenzhen and other special zones, China announced that it will complete a pilot test of a closed internal digital renminbi (RMB) and a pilot cross-border pooling of local and foreign currency in Shenzhen over the next five years; it will also set up a Guangdong-Hong Kong-Macao Greater Bay Area data platform in Shenzhen to promote data trading. Peng Sen, president of the China Society for Economic Reform, was quoted by Xinhua News Agency as saying that this is a major strategic plan of the CPC Central Committee to promote Shenzhen’s reform and opening-up in the new era from an overall perspective. However, Mok Nai-kwong, a member of the Hong Kong Legislative Council’s technology sector, pointed out that as Europe and the United States part ways (decoupling) with China, it is not particularly attractive to replace Hong Kong with the Greater Bay Area as a data platform if China does not first improve its relationship with the international community.
In Hong Kong, the business environment has deteriorated due to the anti-amendment campaign and the Hong Kong National Security Law, the General Office of the CPC Central Committee and the General Office of the State Council released yesterday (11) evening the Shenzhen Pilot Implementation Plan (2020-2025) for the construction of a comprehensive reform of socialism with Chinese characteristics, which stipulates that within two to five years, a number of major institutional achievements that can be replicated and promoted in Shenzhen, which is adjacent to Hong Kong, should be formed to basically complete the pilot reform.
The pilot program consists of 27 articles, stipulating that the market allocation of institutional mechanisms to improve the factors, to create a market-oriented rule of law and international business environment, improve the environmental system of scientific and technological innovation, improve the high-level open economy system, improve the livelihood service supply system, improve the ecological environment and urban space governance system.
In terms of data trading, which is popular in the West, the Pilot Program indicates that Shenzhen will accelerate the cultivation of a data factor market, including taking the lead in improving the data property rights system, establishing a data privacy protection system, and promoting the open sharing of government data in the form of a pilot program. In addition, the government supports the establishment of a data platform in Shenzhen for the Guangdong-Hong Kong-Macao Greater Bay Area and is studying the establishment of a data trading platform.
Legislative Council member Charles Mok said in an interview with the station that it is not known how the Greater Bay Area data platform will work, but it is estimated that a special arrangement will be made to form a “special data zone” in which international standards may be applied, but international enterprises will know how much confidence they have in the Chinese system. He added that Hong Kong has always been the data center in the region, but after the implementation of the National Security Law, some technology companies have withdrawn from Hong Kong and some companies have moved their data centers to Singapore, South Korea and Taiwan, etc. The Beijing government now expects international companies to reverse the trend of relocation and move their data centers from Hong Kong or other places to Shenzhen, which is difficult.
He estimated that some hardware products that have an eye on the mainland market, such as Apple cell phones, the German automotive industry, will tend to be willing to accept the rules of the mainland game, but software companies such as Google, Facebook, etc., will not be attracted by the Shenzhen data platform.
Mo Nai Guang pointed out that Europe and the United States are now parting ways with China, and data is the first to part ways, if China does not change this political relationship, the Greater Bay Area is not very attractive.
In addition, the Pilot Program also supports Shenzhen’s “early and pilot implementation” of capital market construction, including the establishment of a financial technology innovation platform within the People’s Bank of China (PBOC) in Shenzhen, support for the development of a closed internal pilot test of the digital RMB, and the promotion of research and development applications of the digital RMB and international cooperation.
Secondly, the opening up of the financial sector will be expanded, including the launch of a pilot program for cross-border pooling of local and foreign currency, and the improvement of the foreign exchange management system; and support for qualified foreign financial institutions to set up securities companies and fund management companies in Shenzhen in accordance with the law, as well as the development of payment business.
In August, the CCP decided to support Shenzhen to build an “early demonstration zone”. At that time, there were comments that Xi Jinping, the General Secretary of the CCP, was dissatisfied with Hong Kong’s “Hong Kong independence” ideology, saying that with a higher GDP and better performance in some industries than Hong Kong, it was natural to transfer Hong Kong’s status as a financial center to Qianhai of Shenzhen. One year later, the “Pilot Program” was launched, with the expectation that “landmark” results would be achieved within five years, basically completing the task of pilot reform.
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