Qianhai zone may become China’s Cayman Islands
May 1, 2013 Leave a comment
Qianhai zone may become China’s Cayman Islands
Staff Reporter
2013-05-01
Many foreign private equity firms are interested in registering their companies in the Qianhai Special Financial Zone in Shenzhen, although most have no interest in actually operating there. This makes the zone akin to a Chinese version of the Cayman Islands tax haven, the Guangzhou-based 21st Century Business Herald reports.
At least two private equity firms have already registered in Qianhai, and several others are considering a move. The firms are less interested in actually operating within the zone but instead are seeking the tax breaks offered to businesses there, the report said. The zone is desirable because it enables the inflow of overseas-held renminbi, since firms registered in the zone can invest in China’s economy using assets they raise overseas. The zone will start to look something like the Cayman Islands if firms don’t actually rent offices or hire staff in Qianhai, effectively negating the government’s plans to boost the local economy, said one accountant.
Xie Yonghai, a vice president at the Bank of China, dismissed the concerns, saying private equity firms and venture capital firms are merely shell companies and the fact that they wanted to register in Qianhai had already proved the value of the zone.
He said that as long as the local government could provide well-developed infrastructure, including transportation, offices and a large talent pool, there was no reason for companies registered in the zone to not do business there.
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