China and Hong Kong have announced six new policy initiatives aimed at promoting financial cooperation between the two regions. The measures include an upgrade to the “Bond Connect”, optimization of the “Cross-border Wealth Management Connect”, facilitation policies to aid Hong Kong and Macao residents’ home purchase payments, and the deepening of the cross-border pilot of digital renminbi.
The People’s Bank of China and the Hong Kong Monetary Authority jointly announced the six policy initiatives, signaling a further expansion of financial cooperation between mainland and Hong Kong. These initiatives were introduced at a press conference held by the State Council Information Office and are summarized as “three connections and three conveniences”.
The “Three Connects” are closely related to the bond market and include measures to further open up the bond market to foreign investors. The first initiative involves including bonds under “Bond Connect” as eligible collateral for the Hong Kong Monetary Authority’s RMB liquidity arrangement. The second initiative aims to open up the domestic bond repurchase business to foreign investors. The third initiative seeks to optimize the implementation rules for the “Cross-border Wealth Management Connect” business pilot in the Guangdong-Hong Kong-Macao Greater Bay Area.
The scope of participants in the bond repurchase business has been expanded, which will help foreign investors meet their liquidity management needs and control capital costs. This expansion is considered an important progress in the process of opening up China’s bond market to the outside world.
In addition to the bond market initiatives, the newly revised implementation details of the “Cross-border Wealth Management Connect” in the Greater Bay Area have been officially released. The revised details have expanded the scope of participating institutions, increased individual investor limits, and included RMB deposit products of mainland sales banks as eligible for the “Northbound Connect” product range.
Among the newly announced facilitation policies is the implementation of a policy to facilitate Hong Kong and Macao residents’ home purchase payments in the Greater Bay Area. This is expected to better meet the home purchase needs of Hong Kong and Macao residents. Additionally, the scope of the credit cooperation pilot between Shenzhen and Hong Kong will be expanded to facilitate cross-border financing of enterprises in both regions. The cross-border pilot of digital renminbi will also be deepened to bring more convenience to Hong Kong and mainland resident enterprises.
The launch of these measures demonstrates China’s determination to expand high-level opening up to the outside world. Financial professionals believe that these initiatives will further deepen the interconnection of the financial markets of the mainland and Hong Kong and consolidate and enhance Hong Kong’s status as an international financial center. The People’s Bank of China has expressed its commitment to working closely with the financial management departments of mainland and Hong Kong to further optimize financial services, strengthen financial cooperation, and promote the further development of Hong Kong as an international financial center.