Halfway through the 37th Tower overlooking the Luka Victoria Hong Kong, on a pedestrian distance from the National Liberation Army and the Classic Hong Kong Club, there is an unusual office manager of the Fund Manager with a major role on global financial markets.
Spartan office, with two small flags of China and Hong Kong, which provide the only spray of heat in a gray, cold ambience, belongs to a safe investment company, a guardian of third Chinese US $ 3,227 Devis reserve, according to official records.
Founded a month before the official return to Chinese sovereignty Hong Kong in 1997, the unit was the first of four so -called “golden flowers” – Hua’an, Huaxin, Hua’ou and Huamei – set by the State Administration of the Foreign Stock Exchange (safe) to diversify its reserve and maximize a return. Hua’an, the Chinese name of his Hongbong unit, signifies the desire for the safety of the nation.
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Its existence is alluded to mid -January, a week before the official return of Donald Trump to the White House, when Pan Gongsheng, governor National Bank of China (Pboc), said the central bank will “significant increase” Nuture reserve distribution to Hong Kong.
Safe Investment Company in the Central Tower of Aia in Hong Kong 6. March 2025. Photo: Jonathan Wong Alt = Safe Investment Company in the Central Tower AIA in Hong Kong on 6 March 2025. Photo: Jonathan Wong>
This statement caused more questions than answers, and analysts, academics and legislators examined officials on the amount, reasoning, strategy and time behind that financial support.
Xia Chun, the main economist at the SSC Research Institute in Hong Kong, estimates that about 16 percent of Chinese foreign exchange reserves are kept in Hong Kong. “Significant increase,” as PBOC hinted, could mean the almost doubling of that schedule in the long run, he said.
“In the medium term, an increase in 30 percent with 16 percent could result in a significant increase in USD $ 400 billion awarded to Hong Kong,” he added. “This will serve as a medium -sized positive factor for the shares market in Hong Kong. In the long run, up to 50 percent would still be feasible.”
That view has some background. Eddie Yue Wai-Man, Executive Director Hong Kong Monetary Administration (HKMA), believes that the proposed additional distribution would enter into city capital and bond markets, according to his briefing last month.
“We support very much [Pan’s] Talk about the significant deployment of foreign exchange reserves in Hong Kong, “Yue said at a law of the Council on February 3. If more reserves are invested in our market, it will definitely improve our liquidity and feelings. “
China diversified its holding foreign currency in its reserves while geopolitical tensions escalated. The US dollar consisted of 55 percent of its currency composition in 2019, opposite the global average of 61 percent, according to the annual reports of SAFA. The ratio was 65 percent in 2010.
This is reflected in his holding of the American treasury, the gold standard in the markets of global government bonds.
China, which in 2008 overcame Japan as the largest foreign treasure owner, owned $ 1.3 billion dollars of securities at the height of 2013, according to Government data. In 2015, he held $ 1.26 trillion, or 37.4 percent of his reserves, $ 1.07 trillion (34.4 percent) in 2019 and USD 759 billion (23.7 percent) last year.
Some countries, including China, would be careful to invest more in US treasury due to geopolitical tensions and fiscal deficits, according to Wang Jang, head of foreign exchange strategies and rates for larger cinema in BNP Paribas in Hong Kong. The Hong Kong market thus represents the “optimal choice” for China, she added.
Assuming that an additional 10 percent of Chinese foreign currency reserves were invested in Hong Kong bonds, the city’s $ 350 billion bond market would have received $ 300 billion in hand in hand, she estimated.
Although the details are scarce, the support of PBOC for Hong Kong is considered to be a prevailing foil against volatility in shares and currencies – especially at an international financial center where capital enters the UI with a little impedance – which confused investors for only two months in Trump’s second term.
Conflicts between China and USA Will inevitably appear and Hong Kong could help Mitigate part of the pressureexperts say. The city successfully embarked on several financial shocks, including the Asian financial crisis in 1997 and the Global Financial Crisis in 2008.
Governor PBOC Pan Gongsheng participates in a press conference in Beijing in September 2024. Photo: Reuters Alt = Governor PBOC Pan Gongsheng participates in a press conference in Beijing in September 2024. Photo: Reuters>
“The Chinese financial power is even higher, and the world’s largest foreign exchange reserves provide strong support for Hong Kong financial stability and security,” Pan said in the Asian financial forum in January. China has “trust, conditions and ability to maintain stable work on the foreign exchange market,” he added.
He is safe to invest in international bonds, shares and alternative assets through units in Hong Kong, Singapore, New York (Rosewood Investments), London (Gingko Tre investments) and Frankfurt, according to data compiled by the Institute for Sovereign Wealth Funds. About 22 percent of money is invested in alternative property.
To be sure, a safe investment company in Hong Kong is not the only vehicle that arranges Chinese foreign exchange reserves. Beijing also entrusted a third of his reserves China Investment Corpvehicle founded in 2007. The fund of sovereign wealth has an offshore unit based in Hong Kong and New York.
The distribution of more foreign reserves of Hong Kong could strengthen the financial position of the city. The city could become a key battlefield in future conflicts with the US, and Pan’s statement could be interpreted as a signal that China is ready to further prunar its stakes in US treasury.
“Sometimes, through informal channels or unofficial sources, people say China could sell out a part of their American coffers, because this could have a significant impact on the US financial market,” said Zhang Jun, Dean of the Fudan Economics School in Shanghai. “This could be used as a form of impact to negotiate with the US.”
Headquarters of the state administration of the foreign exchange in Beijing. Photo: Yuke XIE alt = headquarters of the state administration of the foreign exchange in Beijing. Photo: Yuke Xie>
In recent years, US treasury has been reduced, according to the SSC Research’s Xia. Adding multiple Chinese state -owned companies (SP) and stock of stable dividend stated in Hong Kong would be a strategic shift in the direction of investment, he added.
Moving reserve to Hong Kong would strengthen the credibility of the currency committee, said Michael Pettis, a professor of finance at Peking University. “Technically this could be a way of spreading liquidity in the Hong Kong market.”
Hong Kong controls the currency committee, which stipulates that his monetary base must be at least 100 percent supported by foreign exchange reserves. Although this ratio has been more than five times higher than the currency of February, the explicit support of PBOC could serve as a distraction from currency speculators, according to Xu Bin, professor of economics and finance at China Europe’s International Business School in Sanga.
The local dollar is connected to the US dollar at a fixed course of 7.80 HK in US dollars, and HKMA intervenes if necessary to keep the value within its HK 7.75 to HK 7.85 trade band. The connection has been caused in the past, recently during pandemic when Hong Kong faced a recession.
“Higher demand for Hongbong dollars could alleviate pressure on a currency adverb,” Xu said. By simply giving a statement, Pboc also sent a signal to say, “We will serve as a strong substrate for the Hong Kong connected course system,” he added.
Cheng Hao worked from home during his stay as Deputy Chief Director of the Chinese State Administration of Devis Affairs in Beijing. Photo: Polovica Alt = Cheng Hao worked from home during his stay as deputy chief operating director of the Chinese State Directorate in Beijing. Photo: brochure>
A safe investment company was founded in June 1997. It is a tenant in the central Tower of AIA on Connaueight Road Central since 2011, according to land register. His monthly rent would fall by about a third of 2.06 million HK ($ 265,000) or $ 147 per square meter 14 years ago, agents said.
Cheng Hao, a man at the helm of the reserve management vehicles, is not a stranger to financial crises.
Prior to the appointment of a director of a safe investment company in Hong Kong in January, an authorized accountant performed the post of Deputy Chief Operational Director in Beijing, according to his LinkedIn profile. He was also a senior Vice President between 2014 and 2016. During the worst fall on China.
Cheng managed Kunteng Investments, a fund used for a nation shares market during melted drop of $ 5 trillion in 2015. His share included roles in Gemdale Corp, Bright Milk and Food, Development of Luka Tianjin, Unico and Zhuhai Huaf China, according to a 2018 report.
The fund was part of Wutongshu Investment, a safe platform and a member of the “national team” planted with 27 billion Juan ($ 3.7 billion) of a fire forces for the rescue of the market.
Did not respond to an interview request.
The Chinese Central Bank has made a series of moves since January to support Hong Kong status as a global center for offshore Yuan, including 100 billion YUAN trade financing for banks and new offshore Yuan or short-term borrowing instrument contracts.
The role of Hong Kong as the International Financial Center must be further reinforced in order to avoid complacency, given the new challenges of trade tariffs and geopolitical rivalries, said Yang Jianwen, a researcher at the Shanghai Academy of Social Sciences.
“The role of Hong Kong as an international financial center is irreplaceable any other place in continental China,” he said. “Increasing the share of foreign currency reserves to the Hong Kong financial property is a sustainable approach.”
