China announced details of a long-anticipated pilot scheme on Monday linking up investment of wealth management products in Hong Kong and Macau with neighboring cities, to further integrate the semi-autonomous economies with the mainland.

"Wealth Management Connect" will allow residents of the two offshore centers and those in nine cities on the mainland - which together form the "Greater Bay Area" (GBA) - to buy such products in each other's markets.

The announcement comes as China seeks to impose a new national security law on Hong Kong, and just two days before the 23rd anniversary of the territory's return to Chinese rule. It reflects "solid backing" from Beijing and that "Hong Kong continues to play a leading role in the country's economic development and opening up of financial markets," the city's leader Carrie Lam said in a statement.

Pilot Scheme

Mainland China has strict capital controls, while Hong Kong and Macau do not. The People's Bank of China and the two cities' central banks will pilot the scheme with adjustable investment quotas, they said in a joint statement on Monday.

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Cross-boundary remittances in the scheme will be conducted in yuan and currency conversions will be done offshore, the statement said, adding the pilot's official launch date would be announced later.

"It represents a major breakthrough in Hong Kong's offshore renminbi business development, and a significant step to foster closer financial cooperation in GBA," Eddie Yue, chief executive of the Hong Kong Monetary Authority, said in the statement. The yuan is also known as the renminbi.

Foreign Firms Should Temper Expectations

Similar 'Connect' links quickly became major channels for global investors trading Chinese bonds and shares after they were launched in recent years, boosting the yuan's use.

Peter Alexander, managing director of fund consultancy Z-Ben Advisors, said foreign firms however should temper their expectations due to the lack of details, such as the timing of the launch or types of eligible products.

"What has been most problematic is...the gross misunderstanding globally as to what, exactly 'wealth management' is in the eyes of the Chinese."