China’s regulator relaxes currency conversion rules throughout Shenzhen, sharpening city’s edge in Greater Bay Area

The Chinese government has eased the rules for converting hard currencies into the yuan in Shenzhen, the special economic zone set up four decades ago to spearhead China’s economic reforms, taking another major step in sharpening the city’s competitiveness in southern China.

Under a pilot programme, effective within the city limits of Shenzhen, foreign exchange will be allowed to be convertible into the renminbi without prior permission by the banks, according to Chinese media reports.

The approvals system will involve spot checks, a change from the previous process that required every currency conversion to be preapproved, according to the reports. The time needed for the process will be reduced to minutes, from several hours, while the documentation will be cut to a single sheet of paper, according to Shanghai Securities News.

The new regulation, which would make it easier for any company or individual involved in the pilot programme based in Shenzhen to purchase the yuan, as the Chinese currency is also called, is a significant incentive to nurture Shenzhen into a global benchmark for competitiveness and innovation by the middle of the century.

“This is actually an expansion of an existing pilot within Shenzhen, but it carries a symbolic significance, because it was announced as part of the latest reform plan to build Shenzhen into a model global city,” said Witman Hung Wai-man, the principal liaison officer for Hong Kong in Shenzhen’s Qianhai special economic zone.

The latest State Administration of Foreign Exchange (Safe) rule, together with the reform plan, comes at a time when protracted unrest in Hong Kong is shaking up local social and financial stability, threatening China’s existing bridgehead with the rest of the world.