By staff reporter Zhou Qiong

The Guangdong Province government unveiled July 28 a plan to transform its coastal region economy from a manufacturing base to a business services center, with a special focus on financial services.

In the near term, Guangdong wants to create a special currency zone that encompasses Hong Kong and Shenzhen, which will set the stage for the eventual free flow of financial resources within the region.

The government planning document sets a goal of completing the overhaul in five to 10 years by transforming an economy currently based on labor-intensive manufacturing to one in which 60 percent of revenues are generated by the service sector. Modern manufacturing and agriculture would provide the other 40 percent.

The plan also maps out geographical boundaries for the industrial transfer. The Pearl River Delta, China’s engine of export manufacturing, would become a service industry hub built on outsourcing from developed countries. Manufacturing companies would move from the delta to new industrial parks in nearby mountain areas.

The document said “in five years, (the government will) make financial services the pillar of Guangdong’s economy and create a financial center in the Guangdong-Hong Kong-Macau vicinity.”
  
Insiders told Caijing the government’s original ambitions for financial center development were toned down before the final draft was released to the public.

Indeed, the province submitted a more detailed transformation plan to the central government in Beijing that included requests for several new policies, including a plan to let Hong Kong and Macau institutions get actively involved in the restructuring of financial institutions in Guangdong with no stakeholder limits.

In addition, the province originally wanted to launch simultaneous stock trading on the Shenzhen and Hong Kong bourses, and to let companies freely choose between the stock markets for listings.

Moreover, the local government wanted to establish a regional bond market, encourage Guangdong companies to issue bonds in Hong Kong, and permit trading in municipal and projects bonds.