The Chinese mainland is accelerating the opening of its financial service industry, by offering favorable land and tax policies to attract more Hong Kong-based companies to invest and operate in a business zone in Shenzhen, Guangdong province.

Known as [Businesses Registration]Qianhai Shenzhen-Hong Kong Modern Service Cooperation Zone, the $65 billion project has been viewed as a testing ground for China to reform its service industry and to further open the country's capital market and to internationalize its currency.

The Shenzhen government said that at least one-third of the zone's land will be reserved for Hong Kong companies to build trading facilities for banks, securities brokers, insurers and mutual funds.

Employees from Hong Kong who have special skills and work at companies established in the business zone will qualify for a lower tax rate.

The mainland will also expand a pilot program involving cross-border yuan loans made by Hong Kong-based banks to non-banking financial institutions, according to Zhang Bei, director of the Qianhai administration.

"The program will create a channel for offshore yuan to flow back to the mainland, and will help accelerate China's liberalization of the interest rate," Zhang said at a news conference in Beijing on Thursday.

Cross-border yuan loans in Qianhai have reached 73.8 billion yuan ($12 billion), and there were more than 10,000 financial companies with operations in Qianhai as of Nov 30, according to the Shenzhen government.

Shenzhen was China's first special economic zone, known for pilot market reforms in the 1980s that were later applied across the country.

The city may also offer Hong Kong companies owned by mainlanders the status of domestic companies in Qianhai. Previously, Hong Kong-based companies were treated as overseas companies.

The number of Hong Kong-based companies in Qianhai is expected to exceed 1,000 with total investment of more than 160 billion yuan by the end of this year, according to the Shenzhen government.

The move to deepen business links between Shenzhen and Hong Kong is part of the mainland's effort to allow Hong Kong to further tap into the mainland's growth and maintain its stability and prosperity as a major financial hub of the country, analysts said.

President Xi Jinping said earlier this year that the Qianhai project should serve as "a lever to promote the structural optimization of Hong Kong and to further increase its connectivity with the mainland".

"We are developing the business zone based on market-driven policies, international standards and the rule of law," Wang Rong, the Party chief of Shenzhen, said at the news conference.

Karmen Yeung Ka-yin, a China tax partner at accounting firm KPMG, said that corporate tax rate in Qianhai is lower than any other mainland business zones, which is very attractive to Hong Kong enterprises.

He said that Qianhai would be even more attractive to Hong Kong companies if the tax on dividends could be exempted.

Stanley Lau Chin-ho, [Hong Kong company registration] deputy chairman of the Federation of Hong Kong Industries, said that the organization's members have expressed interest in Qianhai, but concrete details on the zone's advantages remain unclear, which has caused hesitation among Hong Kong companies.

"Qianhai could streamline the formalities and make the application procedure more simple and convenient," he said.