6 June 2014
The Shanghai Free Trade Zone (FTZ) is expected to pioneer reforms for the rest of China, as a number of local governments in the country are looking to establish similar special regions with international standard business environment.
The official Xinhua news agency reported that at least 20 local governments have submitted proposals for similar zones, each claiming some “unique” strength.
This “FTZ frenzy” has been there in the country even before the Shanghai zone was inaugurated, says the report.
Despite the rising number of applications, authorities have given no indication that they intend to approve another zone.
Meanwhile, officials in Shanghai and the FTZ reiterated that the experiments in the zone only make sense if best practices can be applied elsewhere in the country.
“The FTZ is where we test bold reform initiatives. If it works at the FTZ, we consider expanding it nationwide. If something doesn’t work there, then we drop it. This is what happens in the FTZ,” Xinhua quoted as saying Jian Danian, deputy director of the Shanghai FTZ’s administrative committee.
China opened the Shanghai free trade zone in September 2013, as the world’s second largest economy is looking to test major economic reforms after having started liberalising its market in the 1980s.
In the area, 18 industries are liberalised for foreign players. The industries that were previously restricted to Chinese companies or joint ventures include travel, theatre, banking, brokerage, telecommunications, health insurance and video game gadgets.
Earlier, China relaxed rules to allow more cross-border capital flows into the FTZ, helping banks and other firms in the zone with greater freedom in foreign exchange.
The new rules allow multinationals to open international and domestic accounts to handle foreign exchange transactions. Companies operating in the region can now freely transfer foreign capital between their international and offshore accounts. Foreign inflows to and outflows from domestic accounts are still restricted.
Courtesy of IB Times
6 June 2014