Qianhai projects ‘underway’

Rumors have surfaced recently that the Qianhai Bay economic zone in Shenzhen, Guangdong Province will announce Monday a list of the first batch of banks to participate in the cross-border renminbi loan business. But a spokesman for the economic zone declined to confirm the list with the Global Times Thursday, but said that there will be a signing ceremony that day.

"The financial management division of the economic zone is working on the cross-border renminbi loan business," Cao Hailei, a spokesman with Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone, told the Global Times, but refused to release details on the progress.

A staff member from the zone's financial management division, surnamed Wang, told the Global Times on Thursday that there will be a ceremony organized by the Shenzhen local government and the economic zone on Monday, which will not be open to the media.

Wang did not confirm whether the ceremony will include an announcement of the first batch of participants in the cross-border renminbi loan business, but said that "the number and names of the first batch of banks are not that important."

"What's most important is that the new business in the zone will create more ways for renminbi to flow back to China," Wang said.

The participants are preparing for the cross-border renminbi loan business, and "already have good projects underway," Wang noted.

The China Securities Journal reported Wednesday that there will likely be up to 10 banks in the first batch of participants, including China Merchant Bank and China Construction Bank.

"Chinese banks have a strong interest in the cross-border renminbi loan business, mainly because they will be able to gradually get more access to the offshore yuan business once they've gotten a foothold in cross-border renminbi loans," Zhang Taowei, an associate professor at the School of Economics and Management of Tsinghua University, told the Global Times Tuesday.

The State Council, the country's cabinet, agreed in June 2012 to a pilot program of financial reform in the Qianhai Bay economic zone, which would focus on areas including internationalizing the yuan.

The People's Bank of China agreed with the Shenzhen branch of the central bank on December 27, 2012 to publicize and execute Qianhai Cross-border RMB Loan Management Interim Guidelines, which allow companies in the zone to borrow yuan from Hong Kong banks, with interest rates set independently.

"The cross-border renminbi loan business will be an important financial support for Qianhai, and could also accelerate the use of cross-border yuan and yuan internationalization," Zhang said.

China's major banks saw shares rise this week, with China Construction Bank shares reaching 4.74 yuan per share Thursday, 1.07 percent higher than the previous trading day.