Expert: Hainan becoming China's financial center

HAIKOU /China/, November 9. South China's Hainan province is becoming central to the operation of China's financial funds, according to Yue Zhibin, an official representative of Haikou Sikao private investment fund management company.

"Hainan's free trade port is becoming central to the operation of our country’s [financial] funds," the Hainan Daily newspaper quoted him as saying.

As the expert noted, China's southernmost province "is attracting undivided attention" since last June, when the general program for the creation of a porto franco on the island was published. "It’s booming, the number of financial funds coming into Hainan is ever incresding," emphasized Yue Zhibin.

New opportunities

According to official statistics, most of the private funds in Hainan are being invested in projects related to the development of next-generation telecommunications technologies, alternative energy sources, the development of new materials, microprocessors, artificial intelligence systems, and biopharmaceutical products. Relevant financial organizations are expected to significantly improve the quality of investments.

The Chinese expert noted that in July last year Hainan Free Trade Port announced the introduction of a preferential income tax rate of 15% for strategically important enterprises and specialists in demand. He said such incentive measures coupled with the authorities' efforts to create qualified domestic and foreign limited liability partner-companies (QDLP and QFLP - financial companies that have the right to interact with domestic and foreign investors to form assets used in important projects) will be a key incentive to develop advanced industries and diversify the regional market structure.

As Xie Shiyu, head of Hainan's Special Committee for the Regulation of Private Funds, clarified, the government's stimulus measures and increased number of available financing channels will bring even more big companies to the island.

"Now and in the future, Hainan will be a major center of attraction for those associated with financial funds. We provide a platform for doing business, channels for investment and opportunities for joint projects," corporate asset management company Zhongxin Guohui was qupted as saying by publication.

Expected results

According to Chinese experts, Hainan administration’s targeted policy on the development of financial funds will increase the tax base and tax revenues to the state budget. At the same time, Chinese experts remind that this segment of Hainan's economy "is still at the initial stage of development."

According to the Provincial Financial Supervision Authority, the island has recently started to actively create not only private, but also public funds. In this regard, many large foreign companies have sent applications to the local authorities for the implementation of relevant projects. This happened after the central authorities of China published a legislative act regulating government measures to stimulate the development of the relevant sector in Hainan.

Thus, as the number of funds increases, the number of asset management organizations based on the island will also increase, according to the department. Competent authorities in the province confirmed that they are "making every effort to prevent risks and create a favorable environment for industry development, encouraging close cooperation between financial and commercial entities."

As local authorities noted, the funds "will become a reliable basis for the inflow of investment and increase the number of companies, which will contribute to the formation of the Hainan free trade port" in the foreseeable future.

According to official statistics, there are about 160 companies in Hainan, which are managing several hundred private investment funds with assets of about 11-12 billion dollars. In connection with the constantly increasing market demand on the island there is a constantly growing number of commercial structures, engaged in effective investment of funds in various promising projects. In select months the southernmost Chinese province accounts for up to one-third of the registered cases of new organizations of this kind in the PRC.