China unveils policies for pilot zone to cement mainland-HK ties

HONG KONG - China's top economic planner announced in Hong Kong on Friday new policies to foster a special zone in the southern boomtown of Shenzhen in a bold move to speed cooperation between Hong Kong and the mainland.

The policies, approved by the State Council, will cover six sectors - finance, taxation, legal system, talents, education and medical treatment, and telecommunications, Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, said at a press conference.

The zone, a stretch of 15-square kilometer reclaimed land in Qianhai Bay, is in western Shenzhen and near Hong Kong and Macao.

The central government aims to build Qianhai into a "pioneering zone" to forge closer cooperation between Hong Kong and the mainland, Zhang said.

Under the plan, Qianhai will become a testland for its financial industry open-up, after an array of steps taken by the government to increase the international use of the yuan, or the Chinese currency Renminbi.

Efforts will be made to encourage financial innovation in Qianhai, including preparations for cross-border loan issuance experiment and establishment of a trial zone to run cross-border RMB businesses, Zhang said without elaboration.

The access conditions will be lowered to an appropriate degree for Hong Kong financial companies to run business in Qianhai under the framework of the Mainland and Hong Kong Closer Economic Partnership Arrangement, Zhang added.

The Qianhai zone will provide a preferential corporate income tax rate of 15 percent for companies in certain sectors encouraged by the government, he said.

The plan, initiated in 2010, was considered a gift to Shenzhen on the eve of its 30th birthday as China's first special economic zone. It was written into China's 12th Five-Year Plan in March 2011.

Zhang noted that Qianhai will enjoy supportive policies that are more special than those given to Shenzhen.

Shenzhen Mayor Xu Qin said encouraging progress has been made in the development of Qianhai as planned and the pace will be accelerated by these new policies.

The announcement came before the arrival of President Hu Jintao at noon to attend celebrations for the 15th anniversary of Hong Kong's return to China and the swearing-in ceremony of the fourth- term government of the Hong Kong Special Administrative Region.

Also on Friday, the mainland and Hong Kong inked a supplementary agreement to the Mainland and Hong Kong Closer Economic Partnership Arrangement, pledging to further open the services sector to each other and consolidate trade and economic ties.