In Focus
MARKETS | Staff Reporter, China

Chengdu aims to become the new Hong Kong

Turns to London to jump start transformation into financial center.

Communist authorities in Chengdu have invited London to transform their city into a world-class financial hub comparable to Hong Kong and Shanghai. Ren Ruihong, head of Chengdu's financial committee said the city wants banks, insurance companies and private equity companies, among others.

“We are turning Chengdu into the most open financial sector in China, and our main focus is on links to Britain and Dubai,” he said.

Chengdu Mayor Ge Honglin said the boom over the next decade will match the explosive growth seen in Shanghai in the 1990s.

Chengdu’s incentives include a corporation tax of 15% for 10 years, instead of 25% in other Chinese cities. The first two years of profits are tax-free, and the next three years are at half the rate.

Foxconn is building Apple's iPad in Chengdu and has employed 80,000 persons over the last 18 months as it escapes rising wage costs in the Pearl River Delta.

Analysts said the government policy is working and that these tax rates make it very attractive to build a new factory in Chengdu. Standard Chartered, HSBC and RBS all have operations in Chengdu.

A study by the China-Britain Business Council, however, said Chengdu’s potential in stock-broking, insurance, pensions or raising money on the capital markets has barely been tapped.

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