Now China is getting into the city-building act, with plans, unveiled on Monday, to encourage service sector companies currently located in crowded and pricey Hong Kong to relocate to a coastal area of mainland Shenzhen province known as Qianhai.
According to the online edition of the South China Morning Post, high-ranking Chinese officials set out their plans to develop Qianhai — a 15 sq km area in Shekou — by giving Hong Kong service companies that move there “greater access and a preferential tax rate”.
The SCMP said a list of 20 companies, including HSBC, Hang Seng Bank and Kerry Logistics had already signed letters of intent which stated “their interest in investing in Qianhai”.
It noted that the new zone is expected to generate business of as much as 150bn yuan by 2020.
Some 40bn yuan (HK$46.5 bn) is projected to be spent by the area’s municipal government over the next three years to develop such service industries as finance, logistics, professional services and the media as well as hi-tech industry, the SCMP said.
‘Crucial national strategic project’
Fan Hengshan, head of China’s National Development and Reform Commission’s regional economy department, told the SCMP that Qianhai was a crucial national strategic project that could enhance Shenzhen-Hong Kong economic co-operation.
"Hong Kong can make use of its competitive edges to bolster Qianhai, and hence Shenzhen’s development, as well as benefit from the business opportunities generated," he said.
Insurance businesses for international aviation companies and offshore businesses could be exempted from business tax, Fan added, while technologically advanced companies in the service sector would enjoy profits tax of 15%.
The rate of business tax for insurance companies is currently 5%, and the rate of profits tax for firms elsewhere on the mainland is 25%. In Hong Kong it is 16.5%.
The South China Morning Post’s website is at www.scmp.com.