[The Epoch Times, October 30, 2022](Reported by Li Siqi, a reporter from The Epoch Times Special Department) The Hainan Provincial Government and the Shenzhen Municipal Government issued offshore RMB in Hong Kong not exceeding 5 billion yuan (about 700 million US dollars) in October bond. Experts believe that the CCP’s local government is financially tight, so in addition to issuing bonds in mainland China, it has begun to use Hong Kong more to obtain overseas funds, but Hong Kong’s “economic outlook is very bleak.”
The Hong Kong Monetary Authority (HKMA) announced on October 24 that the Hainan Provincial Government of the Communist Party of China will issue RMB offshore bonds in Hong Kong in October, with an amount not exceeding RMB 5 billion; Provide hosting services. Bonds issued by Hainan Province include blue bonds and sustainable development bonds. The so-called blue bonds refer to bonds issued by governments, development banks or other institutions.
The HKMA also announced on the same day that the Shenzhen Municipal Government of the Communist Party of China will also issue up to 5 billion yuan of offshore renminbi bonds in Hong Kong. Shenzhen’s first bond issue in Hong Kong is in 2021.
HKMA chief Yu Weiwen said Hainan was “the first mainland local government outside the Guangdong-Hong Kong-Macao Greater Bay Area to issue bonds overseas” and that the issuance of bonds by Hainan and Shenzhen in Hong Kong would help “consolidate Hong Kong’s role as a global offshore renminbi business center and Asia’s green and sustainable finance hub”.
Li Songjun, a Ph.D. in economics who has been concerned about China’s economy for a long time, told The Epoch Times on October 28: “The purpose of Hainan’s issuance of bonds in Hong Kong is to expand financing channels and ease financial tensions. Hainan not only issues bonds in China, but also in Hong Kong for the first time. Issue offshore RMB bonds and use the Hong Kong market to make money in foreign countries.”
Data from the Bank of China Research Institute shows that in the first seven months of this year, the fiscal deficit of Hainan Province increased by 30% over the same period last year; at the same time, among the 31 provinces and cities in China, only Shanghai had a fiscal surplus, but it shrank by 79.24% over the same period last year. .
The Hainan Provincial Department of Finance of the Communist Party of China announced that it plans to issue 13.29147 billion yuan (about 1.86 billion U.S. dollars) of local bonds in October, of which 11.8 billion yuan (about 16.5 million U.S. dollars) of new special bonds will be issued.
Li Songjun said: “The CCP’s local finances are very tight this year, and governments at all levels are facing severe fiscal deficits. According to the data released by the CCP’s Ministry of Finance, Bloomberg found that the total fiscal deficit in the first three quarters of this year alone was as high as 7.16 trillion yuan (about 1 trillion US dollars). ), hitting an all-time high, almost 3 times that of the same period last year.”
She believes that under the CCP’s strict “zeroing” policy, local governments’ spending on epidemic prevention remains high, as well as the large-scale tax rebate policy, and the sharp decline in land sales, which has led to a huge gap in local finance.
Regarding the issuance of offshore RMB bonds by the CCP’s local government in the Hong Kong market, Li Songjun said: “For the CCP, in addition to expanding financing channels in the mainland, it is also to better utilize the Hong Kong financial market as a platform for attracting foreign capital; While gradually withdrawing from Hong Kong’s financial market, the CCP also hopes to activate Hong Kong’s RMB bond trading by issuing more mainland bonds, and consolidate Hong Kong’s position as an offshore RMB business hub.”
“In this way, under the ‘dual circulation’ framework with ‘internal circulation as the main’, the CCP can take advantage of the Hong Kong financial market and continue to ‘money’ among foreign investors.”
Although Hong Kong wants to maintain its status as an international financial center, in Li Songyun’s view, Hong Kong’s “economic prospects are very bleak.” “After the implementation of the Hong Kong version of the National Security Law, Hong Kong’s soft power as an international financial center has been greatly weakened,” she said.
She cited a record of questions and answers given by Xu Xiaonian, a professor at China Europe International Business School, at the Boao Forum for Asia in 2009. As for whether Shanghai can become a financial center in 2020, Xu Xiaonian said: “Don’t worry about Hong Kong, the international financial center is not about GDP, not about your ports, airports, not about how developed your computer system is, not about how many office buildings you have. What makes an international financial center? Soft power, legal system, regulatory system, credit, international credit, integration with international operations, international talents, and international business process (business process). process).” “It is not hardware but software that creates a financial center.”
Editor in charge: Lian Shuhua