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China's New Wall Street
Published on: -0001-11-30
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(forbes)HONG KONG - The industrial port city of Tianjin has long been a conduit for goods to distant lands. Now the Chinese government is grooming it to play the same role for money.

In a move that is part of a campaign to turn the northeastern city into the country’s second financial center after Shanghai and its main venue for overseas transactions, the government on Monday named Tianjin as the location for a ground-breaking experiment to allow individual Chinese to invest directly in the Hong Kong stock market.

The new outward investment scheme, the biggest relaxation yet in the country’s rigid foreign exchange control regime, is intended to provide a release valve for some of the money that is piling up in China due to its trade surplus and robust inward investment, which is stoking inflation and putting upward pressure on the yuan.

The country’s cabinet, the State Council last year announced that it would develop the city of 12 million people as a special economic zone, similar to Shenzhen and Shanghai’s Pudong area, with the aim of using it as a principal testing ground for “important reforms” related to financial affairs and financial liberalization.

Whereas Shanghai focuses on domestic capital markets, the idea is to turn Tianjin into a financial center for direct finance, venture capital and foreign exchange.

Tianjin developed into an important international trading city in the 19 th century. It was Republican China's second-largest financial, industrial and trade center after Shanghai.

Much like the Pudong financial district in Shanghai, Tianjin also has its own showcase neighborhood: the Tianjin Binhai New Area, a 2,270-square-km stretch of land along the coast, complete with a free trade zone, a financial street and the nation’s largest bonded port area.

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