Hong Kong launched its Delivery Connect gold clearing and settlement programme on July 7, drawing attention to bullion. The bigger signal, an SCMP opinion piece argues, is that Beijing has settled on a gradual, channel-by-channel model for opening China’s financial markets, with Hong Kong as the bridge.
Gold grabbed the headlines when Hong Kong launched its latest Connect programme on July 7, but the metal is not the real story. Delivery Connect, part of the city’s new gold clearing and settlement system, reads instead as fresh evidence that Beijing has chosen a distinctive route for opening up its financial markets, according to an SCMP opinion piece.
A channel-by-channel model, not a big bang
Rather than embracing wholesale financial liberalisation, China integrates with global markets through carefully designed cross-border channels, with Hong Kong serving as the bridge. The author argues Delivery Connect shows the Connect framework has grown from a set of isolated reforms into the blueprint for China’s financial opening-up.
That approach breaks from the path many emerging economies took over the past three decades. Financial liberalisation was once tied to sweeping deregulation, rapid capital account opening and unrestricted capital flows, and China has consistently rejected that model. Instead, Beijing has widened market access step by step while keeping oversight of capital movements and financial risks, using Hong Kong as the testing ground where the approach is designed and scaled.
How the Connect programmes stack up
The sequence of programmes illustrates the strategy. Stock Connect, launched in 2014, gave international investors access to mainland equities and let mainland investors buy Hong Kong-listed shares. Bond Connect followed in 2017, opening China’s vast fixed-income market.
Cross-boundary Wealth Management Connect then extended integration into retail investment products, while Swap Connect gives global investors access to the mainland’s interbank financial derivatives market. Each scheme first looked purpose-built for a narrow task. Taken together, the author suggests, they point to a coherent effort to knit China’s markets into global capital while preserving Beijing’s preference for gradual, supervised reform.
Source: South China Morning Post
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