Behind the scenes, however, Hong Kong officials may have begun a campaign to attain special market access to China in advance of China’s commitments stipulated by its agreement to enter the World Trade Organization.
According to sources familiar with the situation, ealier this year the Hong Kong administration asked various sectors of the economy, including financial services, to assemble proposals for Chinese officials. In the case of the finance community, a committee was assembled, chaired by a CEO of a prominent Hong Kong-based fund management company, to provide the Financial Services Bureau with a ‘wish-list’ for future dealings with the Mainland.
FSB is said to have coordinated this effort, soliciting ideas from the private sector and then getting comments from other regulatory bodies such as the Securities and Futures Commission, the Hong Kong Monetary Authority and the Office of the Insurance Commissioner.
Sources say the thrust of the proposals would allow Hong Kong-based entities access to Chinese markets earlier than openings stipulated under China’s accession to the World Trade Organization, on the basis of ‘one country, two systems’.
“The Hong Kong emphasis is on ‘one country’,” says an insider.
In the case of financial services, this would mean Hong Kong-based organizations would have early access to A-share business; would be able to establish Sino-foreign joint ventures in asset management or broking; and perhaps allow mainland residents to invest in red chips and H shares.
If anything like this was allowed, it would give Hong Kong-based companies an enormous advantage over rivals in the West, Japan and Singapore, and go a long way toward boosting Hong Kong’s role as a global financial centre.
What is unknown, however, is how much of these proposals – for finance or other sectors – made it to officials from China’s securities and insurance regulators during the Fortune bash, or in what form. Members of the private sector do not know what happened to their proposals.
An FSB spokesman declined to comment on this committee, the content of its proposals or the dissemination of its ideas. Instead he made bland references to the opportunities of WTO for Hong Kong’s financial services industry, the need to deepen Hong Kong’s financial market. The new financial secretary, Antony Leung Kam-chung, has made introducing new financial products and services into the mainland market a priority, he adds.
Sources aware of Hong Kong’s initiative say the government has too much at stake to publicly acknowledge its appeal for special treatment regarding WTO. “If their proposal was made public and then rejected, it would be a major slap in the face,” says one. “Hong Kong can not run the risk of being rejected by China – or the international community.”
