Hong Kong and Southern Provinces Form "9+2" Regional Bloc
Nine provinces and two special administrative regions joined together in June to form a regional economic bloc with a population of similar size to that of the European Union. The members—special administrative regions Hong Kong and Macao, and the provinces of Fujian, Guangdong, Guangxi, Guizhou, Hainan, Hunan, Jiangxi, Sichuan, and Yunnan—will work together to eliminate nontariff trade barriers within the region and to coordinate provincial government policy.
The first meeting of the Pan-Pearl River Delta Regional Cooperation and Development Forum, in the first week of June, focused on internal transportation ties and other regional projects. Observers note that the forum's formation, which was suggested by Guangdong last August, shows a remarkable tolerance by a central government traditionally more cautious of regional independence.
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Newbridge Takes Controlling Stake in Shenzhen Development Bank (At Last)
A year after an agreement between Newbridge Capital Group and Shenzhen Development Bank (SDB) publicly fell apart, SDB announced that Newbridge will take a controlling, 17.89 percent stake, according to press reports. Newbridge will become SDB's single largest shareholder, will be entitled to a majority of board seats under Chinese law, and will become the first foreign investor to control a Chinese bank.
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Four government shareholders—Shenzhen Investment Management Co., Shenzhen International Trust and Investment Co., Shenzhen Social Security Co., and Shenzhen Changjian Development Group—will sell 348.1 million nontradable shares to Newbridge for roughly $150 million. This amount is far less than the stake's market value, but stock prices in China are generally considered overvalued because of the scarcity of investment options, and strategic investors rarely pay market price for their stakes.
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