Exploring new opportunities: Qianhai Shenzhen-Hong Kong International Financial City

In September 2021, the State Council of the People's Republic of China released the Plan for Comprehensively Deepening the Reform and Opening up of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone. According to the Plan, the total area of the Cooperation Zone will be expanded eight-fold from 14.92 square kilometers to 120.56 square kilometers, including modern service areas at the airport and a portal hub and hi-tech zone on the west coast, which will help the coordinated development of multiple sectors. The Plan proposes to support the Qianhai Cooperation Zone in further opening up the services sector to Hong Kong and Macao businesses under the Closer Economic Partnership Arrangement (CEPA). It emphasizes Qianhai's positioning as the “role model for opening up China’s financial industry” and the “innovation pilot zone for cross-boundary RMB business”.

The commencement ceremony of the construction of Qianhai Shenzhen Hong Kong International Financial City (“Qianhai International Financial City”) was held at Qianhai Kerry Center on 28 October 2021.

Qianhai International Financial City will strive to provide a space for Hong Kong financial institutions to expand into the Chinese Mainland market, and become an important hub for Shenzhen-Hong Kong cooperation to realize their complementary advantages and integrated development, support Hong Kong to better integrate into the new landscape of China's financial reform and opening-up, and consolidate and enhance Hong Kong's status as an international financial center.

Location and policy advantages

Qianhai International Financial City is situated in Shenzhen's Qianhai Guiwan and Qianwan district, within Qianhai Cooperation Zone pre- expansion, with a planned area of 2.3 square kilometers. To date, premium office buildings offering more than 1 million square meters of good value for money office spaces with comprehensive commercial facilities have been put into use, hosting more than 100 financial institutions of which over 30% are from Hong Kong or overseas. An industrial cluster has taken shape. Twelve banks have chosen Qianhai to launch their businesses under the Cross-boundary Wealth Management Connect (WMC) pilot scheme, staying ahead of the curve in Shenzhen and Hong Kong’s financial cooperation and innovation.

Preferential policies and incentives

On 22 November 2021, Qinghai Management Authority issued the Interim Measures for the Management of Special Funds for Supporting the Development of the Financial Industry of Qianhai Shenzhen- Hong Kong Modern Service Industry Cooperation Zone of Shenzhen. Provisions to support Shenzhen and Hong Kong’s financial cooperation are the most important elements of the Measures, representing 60% of the articles therein.

The Measures include multiple favorable policies, including one-off setting up incentives, move-in incentives, and business innovation rewards, etc., targeting licensed financial institutions and their subsidiaries, fintech companies, green finance institutions, e-CNY operating institutions, commercial factoring companies, finance leasing companies, Qualified Foreign Limited Partnerships (QFLP), and Wholly-Foreign Owned Enterprise Private Fund Managers (WFOE PFM). Each incentive/reward amount can be worth up to RMB10 million. In addition, operating incentives of up to RMB3 million will be granted to the management team if an institution who moved in the Zone after 1 January 2021, satisfies the annual profit and income requirement.

At the same period of time, the newly rolled out Measures on Subsidies for Office Buildings in Support of Businesses Aggregation of Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone of Shenzhen offers to subsidize eligible financial institutions with up to RMB30 million for buying offices and RMB5 million a year for renting offices.

Notably, institutions that have moved in Qianhai International Financial City and their main businesses are eligible for the Catalogue of Encouraged Sectors of Qianhai can enjoy a preferential enterprise income tax rate of 15%. Units established by financial institutions, including tech firms, call centers, and back-office service centers (including legal, accounting, tax, and human resources etc.) may be eligible according to the Catalogue.

Set up in Qianhai to seize business opportunities we believe this series of preferential policies, particularly the Measures, provide great opportunities for Hong Kong’s financial institutions to participate in the development in the Greater Bay Area. Financial authorities, institutions, and professionals of Qianhai and Hong Kong will continue to strengthen their collaboration and communication, and work closely to enhance connectivity between Hong Kong and Chinese Mainland financial markets to create more favorable conditions for Hong Kong’s financial sector to integrate into the GBA.

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