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- Global Research
- General Research Insights
Greater Bay Area Insight
- Mainland China is accelerating the opening of its service sector
- The Nansha 30-point financial plan should boost financial ties across the GBA, spurring growth and confidence
- Innovative policies are needed; Nansha may be just a start
Opening the service sector to foreign investors
The central government is accelerating the pace of service sector opening by expanding market access to several key sectors. If successfully and swiftly implemented, these liberalisation measures could inject new growth impetus and attract fresh foreign direct investment (FDI) inflows to the service sector. The Greater Bay Area (GBA) and its pilot cooperation zones are at the forefront of opening and significant progress has been made in areas such as financial market connectivity and regional integration.
The Nansha 30-point plan is another step forward for financial liberalisation
In May, the GBA welcomed a new round of financial opening measures. Five government bodies jointly unveiled the “Nansha 30-point financial plan”, pledging to develop Nansha, a district in Guangzhou, into another pilot zone for financial opening. Compared with other pilot zones in the GBA, the latest plan places more emphasis on supporting technology innovation and advanced manufacturing. Other measures centre around financial market interconnection, cross-border RMB businesses, and Nansha’s cooperation with both Hong Kong and Macao. We believe these preferential measures will give Nansha advantages in terms of attracting new investments in its targeted sectors. Nansha’s faster economic growth also offers opportunities for both enterprises and individuals.
Mainland China still has plenty of room to liberalise service trade
Note: The STRI outcomes reflect restrictions that apply to key strategic services sectors, and indices take values between zero and one, one being the most restrictive.
Source: OECD, HSBC
Innovative policies needed
Speeding up the opening of the service sector reflects policymakers’ determination to promote high-quality growth at a time of rising trade protectionism and geopolitical complexity. We think more innovative policy measures are needed to spur growth and confidence. In our view, the pilot zones are important testing grounds for new reform measures. The Nansha 30-point plan may be the beginning, with further liberalisation ahead. In this new phase of opening, Hong Kong remains in a unique position. It can help by driving the internationalisation of surrounding cities, forming unified standards, and helping to cultivate a world-class business environment in the GBA. That said, challenges remain in the areas of policy coordination and a broad-based demand recovery.
Conclusion
In response to rising trade protectionism and geopolitical complexity, mainland China has stepped up efforts to open the service sector to overseas investors. Industries such as telecommunications, finance, and healthcare offer abundant opportunities for foreign participation. This reflects policymakers’ determination to broaden market access and attract FDI. Having said that, they are taking a measured approach – localised pilot schemes are preferred before any nationwide implementation. Pilot cooperation areas, including those in the GBA, are perfect places to carry out these reforms.
In recent years, the GBA has introduced a variety of measures to facilitate market interconnectivity. Grappling with global trade uncertainty, more innovative policy measures would spur growth and inject confidence. This is perhaps why the term "innovation" appeared 19 times in the Nansha 30-point plan. Hong Kong still has a unique role to play in the new round of opening. This time, the city could do more to complement surrounding GBA cities. For instance, through the compatibility of domestic and foreign management standards, Hong Kong could foster a world-class business environment in the region.
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