Financial Secretary John Tsang speaks at Wednesday's Hong Kong finance forum in Shanghai. Provided to China Daily

Financial Secretary John Tsang said on Wednesday that he believes cooperation between Hong Kong and Shanghai could propel China's emergence as a global financial powerhouse.

Speaking at a high-level Hong Kong finance forum in Shanghai, Tsang said both cities have important roles to play in China's financial development.

"China will be the main focus on the world stage in the future," Tsang said. He added that "It will be a unique advantage for the country's financial strategy to have two international financial centers - Hong Kong and Shanghai."

"Hong Kong and Shanghai will show respective strengths and complement each other in contributing to the economic development of China and the globalization of its financial markets," Tang stated.

Also speaking at the forum, Tong Daochi, Director-General for International Affairs of the China Securities Regulatory Commission, said that mainland regulators will allow the domestic sale of exchange-traded funds based on Hong Kong-listed stocks.

Regulators will also consider revising rules to make it easier for smaller mainland firms to list in Hong Kong, and allow foreign companies to sell yuan-denominated stock and bonds on the mainland, said Tong.

During his opening speech, Tsang said that Hong Kong's greatest advantage is its international outlook and experience.

"This is evident in our highly open financial system, free flow of capital and information, and internationally-connected regulatory systems, which attract capital and talent from all over the world to come to Hong Kong," Tsang told participants.

He also said that Hong Kong would continue to strengthen its role as a testing ground for the internationalization of the renminbi.

"As an established international financial center, Hong Kong can promote the internationalization of the renminbi and the development of its asset market," Tsang added.

During the renminbi internationalization process, Hong Kong and Shanghai will act like two engines of the same airplane, Tsang explained.

Tsang expects that the introduction of more yuan financial intermediary products will significantly boost Hong Kong's efforts to develop into an offshore yuan hub. This is largely made possible by the agreement that the Hong Kong Monetary Authority (HKMA) and the People's Bank of China signed on Monday to minimize restrictions on renminbi transfers between banks and companies in Hong Kong.

Peter Pang, HKMA deputy chief executive, agreed with Tsang. He said that the HKMA is "confident" about the development of an offshore yuan market in Hong Kong.

China Daily

(HK Edition 07/22/2010 page3)