BEIJING (Dow Jones)--HSBC Holdings PLC (HBC) will set up new China branches or offices in the places where Beijing's economic stimulus program has the most effect, HSBC Asia Pacific Chief Executive Sandy Flockhart said Tuesday.

Speaking at the opening of HSBC's 20th branch in China, Flockhart said that while it will take time for China's CNY4 trillion stimulus package to fully filter through to the real economy, the program has already kicked off lots of new infrastructure projects, creating business opportunities for HSBC's clients, he said.

While HSBC is looking at where clients' businesses are growing fast and which regions are receiving more government policy support, the main issues being considered when HSBC expands geographically in China are "where the stimulus is going to be spent", Flockhart said in an interview with Dow Jones Newswires.

HSBC on Tuesday became the first foreign bank to launch a branch in Jinan, the capital city of China's eastern Shandong province.

The Bohai Rim region, which includes Jinan, is gaining importance as it's estimated to produce 30% of China's gross domestic product by 2010, Flockhart said.

Some "pretty important" companies in the Bohai region, such as Jinan-based China National Heavy Duty Truck Group Co., or Sinotruk, other heavy and light manufacturers, steel firms, as well as large textile companies, are likely to benefit from robust demand created by China's economic stimulus plan, he said. These companies are either HSBC's existing clients or customers to be explored in the future, he said.

In November last year, Beijing introduced a CNY4 trillion economic stimulus program that has focused on directing bank lending to infrastructure projects. Many upstream and downstream sectors linked to the projects such as transportation and steel are set to benefit from the program.

HSBC now has six branches in the Bohai region, four branches each in the Yangtze and Pearl River Deltas, as well as six branches in the central and western region, which are poorer but have enjoyed government's policy support. Most of HSBC's 68 subbranches are located in four of China's richest cities, namely Beijing, Shanghai, Shenzhen, and Guangzhou.

HSBC will also open a branch in Taiyuan, the capital city of Shanxi, China's biggest coal producing province, later this year, HSBC said in a statement.

The affluent Yangtze River Delta, centered in the coastal financial hub of Shanghai, and the Pearl River Delta, centered in Guangdong, remain "of strategic importance" to HSBC's China operations, Flockhart said.

Flockhart said HSBC is on track to "reach...or get close to" the earlier target of increasing its total outlets in China, including branches and lower-tier sub-branches with more limited businesses, to around 100 by the end of this year and has been adding staff accordingly.

Positioning As International Player

Despite its ambitious expansion plans, HSBC is positioned differently from Chinese banks, Flockhart said.

"I don't want to give an impression...that we are a major competitor to very large Chinese banks. They have very much their market to play (with) and we have the bit that we can do," he said.

HSBC hopes its clients in China will take advantage of the banking giant's global networks and its capability to structure deals and connect companies, especially exporters and importers, with other parts of the world, Flockhart said.

He declined to comment on HSBC's financial outlook in China. HSBC is set to announce its first-half earnings in early August.

HSBC China's 2008 pretax profit rose by 85.2% to CNY2.2 billion on operating income of CNY5.4 billion.

A Goldman Sachs research note said HSBC has been "creating the equivalent of one Ningbo Bank each year with its China deposit growth", as China operations account for more than 17% of the entire group's profit. Ningbo is a fast growing city bank located in the port city of the eastern, wealthy province of Zhejiang.

HSBC has said in the past that it wants a domestic Chinese listing, but at the moment, Chinese regulations bar foreign companies from doing so.

Hong Kong's Apple Daily reported earlier this month that HSBC has shortlisted four to five investment banks to handle its planned listing in Shanghai. But Flockhart said HSBC has no firm timeframe for listing..

"Getting listed is a long-term plan...we continue to work towards this end," he said.

HSBC was established as the Hong Kong and Shanghai Banking Corp. in 1865 to finance trade between Europe, China and India. Though its headquarters is now in London, the bank has maintained a strong presence in the region throughout the return of Hong Kong to China in 1997 and the turmoil of the Asian financial crisis that followed.

In past decades, HSBC has invested more than US$5 billion in mainland China, with its interests including CNY8 billion worth of registered capital in HSBC China; an 18.6% stake in Bank of Communications Co., China's fifth-largest lender by assets; a 16.7% holding in Ping An Insurance (Group) Co. of China Ltd.; 8% ownership of Bank of Shanghai Co, and a 49% stake in HSBC Jintrust Co, a Shanghai-based fund company.

In June, HSBC said HSBC Life Insurance Co., a planned 50-50 insurance joint venture with Beijing-based financial-services provider National Trust Ltd., had received approvals from China's insurance regulator and will start operations in the third quarter.

Flockhart said Tuesday that the exact time and site for launching the joint venture has yet to be finalized.