BEIJING (Reuters) – China’s securities regulator has approved a plan by Hang Seng Bank and a Chinese partner to form the first fund management company that will be majority owned by a foreign firm in a special development zone in southern China, according to a posting on the zone’s website.

The fund management company will be founded in Shenzhen’s Qianhai special development zone, with Hang Seng Bank holding 70 percent ownership of the company and state-run Shenzhen Qianhai Financial Holdings Co owning the remaining stake, the posting on Saturday said.

The approval marks the latest step toward linking the financial hub of Hong Kong with rapid development in the mainland. China’s central government approved the Qianhai zone in 2010 specifically to promote cross-border development of the service industry in partnership with Hong Kong.

While Hong Kong is separately administered from mainland China under the “one country, two systems” policy, the two have become increasingly economically and politically integrated since the British returned the former colony to China in 1997.

The Qianhai zone offers companies more flexibility in cross-border lending than is normally allowed in China, which tightly controls money flowing in and out of the country.

The joint firm will raise money, offer fund products and asset management services.

(Reporting by Jake Spring and Shu Zhang; Editing by Kim Coghill)

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