A couple pose for their wedding picture in Hong Kong. Photo: CFP

A plan for a free trade zone (FTZ) incorporating Guangdong, neighboring Hong Kong and Macao has been submitted to the State Council and is likely to be approved, Shanghai Securities News (SSN) reported Tuesday.

The plan is based partly on the overall plan for the China (Shanghai) Pilot Free Trade Zone and was submitted to the State Council, the country's cabinet, in the middle of the month, the report said, citing unnamed sources.

Compared with the Shanghai FTZ, the Guangdong-Hong Kong-Macao FTZ will be more innovative and more open to liberalization, it said.

The FTZ will focus on six areas - manufacturing, logistics, international trade, maintenance, research and development, and international trade settlement - the report said, citing documents obtained by SSN.

Qualified enterprises in Guangdong Province will be allowed to issue corporate bonds denominated in yuan in Hong Kong, and banks in Hong Kong and Macao will be allowed to make yuan loans to Hong Kong, Macao and Taiwan-funded enterprises, it said.

"The big highlight of the Guangdong-Hong Kong-Macao FTZ is that the zone will link Guangdong, Hong Kong and Macao and facilitate the economic integration of the three regions," Yang Zaigao, vice head of the Guangzhou Academy of Social Sciences (GZASS), told the Global Times Tuesday.

"Guangdong is the forerunner of the country's reform and opening-up drive. Its plan will undoubtedly be innovative, especially in terms of upgrading customs clearance techniques and developing new industrial chains," Yang said.

The Guangdong Provincial Development and Reform Commission was not available for comment Tuesday.

The Guangdong-Hong Kong-Macao FTZ will cover Guangdong Nansha New Zone, Shenzhen Qianhai New Zone, Zhuhai Hengqin New Zone and Guangzhou Baiyun Airport Bonded Area, the SSN report said.

Foreign companies will be given the same treatment as their Chinese counterparts, and the zone will be more open to foreign investment than the Shanghai FTZ, it said. 

The China (Shanghai) Pilot Free Trade Zone was launched in September and was seen as a testing ground for financial reforms and innovations in commodities trading and logistics.

Shanghai adopted a "negative list" approach to foreign investment in its free trade zone, allowing foreign companies to invest without restrictions, but only in sectors not included on the list.

"Investment restrictions will be greatly loosened. Instead of weakening Hong Kong's position as an international trade hub, the new zone will further expand Hong Kong's influence," said Yang from the GZASS.

"The positioning of the Shanghai FTZ and Guangdong-Hong Kong-Macao FTZ should be different, with the latter more focused on facilitating financial services and trade with Hong Kong and Macao," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times Tuesday.

"Shanghai will focus more on the internationalization of the yuan while Guangdong will focus on promoting the practice of the linked exchange rate system of the Hong Kong dollar and the US dollar in the zone," Bai said.

China will ease investment restrictions and accelerate construction of free trade zones, according to details released on November 15 about the reforms decided on at the Third Plenary Session of the 18th Communist Party of China Central Committee last month.

So far, North China's Tianjin, Southwest China's Chongqing and Qingdao in East China's Shandong Province have also reportedly applied to set up free trade zones.