Hoping for a new model
Xiao Geng, director of the Institute of Policy and Practice at the Shenzhen Finance Institute, would like to see Qianhai introduce a new model of "dual headquarters" together with the HKSAR government. Under this model, eligible firms registered and based in Hong Kong can set up a secondary operating base in Qianhai, but their offshore businesses in Hong Kong and Qianhai should continue to be regulated and supervised by the Hong Kong authorities. The tax and GDP contributions of these "dual headquarters" firms can be shared between the authorities on both sides, Xiao said.

Such a plan could help ease the restrictions involved as overseas firms would become mainland market entities once they are registered in Qianhai and would have to abide by foreign-exchange regulations under the mainland system, he says.

Qianhai has made many innovative attempts to open up various channels between the mainland and Hong Kong, but operating different financial products directly in one system can help companies make trading decisions conveniently. "The solution will further attract more Hong Kong firms to invest in Qianhai as they can give full play to Hong Kong's free and flexible international capital management systems while avoiding the local high cost of office space and talents," Xiao said. "And their operations base in Qianhai can provide close access to more mainland clients." Hong Kong's economic growth, tax revenues and employment could also be further enhanced, he added.

Xiao also suggested that mainland firms offering onshore services in Qianhai be allowed to set up secondary headquarters in a pilot zone in Hong Kong to develop overseas markets. The new model could upgrade cooperation between the two sides to a new partnership that will complement each other and achieve a win-win outcome, he said.