China launches 'connect program' with Hong Kong to facilitate cross-border payments

By Mucahithan Avcioglu

ISTANBUL (AA) - Mainland China is launching a new "connect program" with Hong Kong to enable cross-border payments, a move seen as Beijing's attempt to expand its financial industry and use the southern financial hub to improve its connections with the rest of the globe, according to the daily South China Morning Post.

Through the Payment Connect program, which will begin on Sunday, customers will be able to send money more quickly and easily by connecting Hong Kong's Faster Payment System (FPS) with China's Internet Banking Payment System.

“It’s another milestone in deepening financial cooperation between the mainland and Hong Kong. It fully indicates the central government’s determination to consolidate and improve Hong Kong’s international financial status,” Pan Gongsheng, governor of the People’s Bank of China, said at the launch ceremony on Friday in Beijing.

The program will “improve the efficiency of cross-border payments, facilitate economic and trade cooperation, as well as boost people exchanges,” he said. “It will bring new vigor for Hong Kong’s development and also boost cross-border use of the yuan.”

Eddie Yue, chief executive of the Hong Kong Monetary Authority, said the scheme provided residents and institutions with a safe, efficient and convenient payment option, while also hailing the deepening economic cooperation.

“We’ll join hands with the PBOC and industry players to optimize user experience and enrich application scenarios,” he added.

As a conduit to increase China's outbound investment through the Belt and Road Initiative, Hong Kong, an international financial hub that attracts foreign investment into mainland China, has been supporting the development of an offshore yuan center.

Two days after Pan unveiled eight financial measures, including the creation of an "international operations center" for the digital yuan to increase the renminbi's worldwide clout, the new initiative was launched. Among other things, China promised to test a variety of structural monetary policy instruments in Shanghai, according to the source.

China also signed a deal with Shanghai on Wednesday, to increase collaboration in the financial sphere.

In the last 10 years, a number of connect programs have significantly increased Hong Kong's position as a "superconnector."

In November 2014, Beijing began a scheme to link the stock markets of Hong Kong and mainland China, enabling foreign investors to purchase mainland stocks and vice versa.

Similar ones that permitted two-way bond investments, wealth management, and interest rate swaps were eventually adopted.