Free trade zone declared open for business

China inaugurated its much-anticipated free trade zone in Shanghai yesterday, a major milestone underscoring the country’s commitment to push ahead with reform and opening up.儲存The zone, officially the China (Shanghai) Pilot Free Trade Zone, is seen as a key reform which will rejuvenate the world’s second largest economy as China strives to reorient the economy toward a growth mode that relies more on domestic demand than exports and investments.“Following the trend of global economic developments, the establishment of the zone aims to accelerate the transformation of government function, explore innovation of management mechanism, and expand openness in services and financial sectors,” Commerce Minister Gao Hucheng said at the opening ceremony.Gao said the government hoped the zone would function as a testing ground for reforms and an open economy and act as a demonstration to promote economic development nationwide.A video-game joint venture of Microsoft and Shanghai-based Internet TV firm BesTV became the first company registered in the free trade zone.Shanghai Party chief Han Zheng handed a license to Ralph Haupter, chairman and chief executive of Microsoft China.“This will give the opportunities to Chinese developers to develop solutions for China but also for worldwide markets and many international companies are expected to come to China and localize their products,” Haupter said.Another 35 companies were given licenses to operate in the zone, which covers almost 29 square kilometers in the Pudong New Area.A blueprint of the treed trade zone released last Friday charts over 90 policies concerning five major areas.According to the blueprint, he country is to speed up transforming its government functions, ease restrictions on foreign investments, facilitate international trade by further opening the service sector, deepen financial reforms and improve regulatory and taxation systems.Banking regulators gave the green light to 11 financial institutions including the Industrial and Commercial Bank of China, Bank of China, Citi (China) and DBS China to set up branches in the zone.“Under the precondition that risks can be controlled, China will create conditions to test yuan convertibility under the capital account, market-set interest rates and cross-border use of the Chinese currency in the zone,” the blueprint says.Significant milestoneDBS China managmini storageng director Tan Teck Long described the launch as a significant milestone for the country’s economic reforms, saying it would bring vigorous developments in trade, law, consulting and especially financial innovation.“The opportunity here is the right of participation,” said David Wu, senior partner at PricewaterhouseCoopers. “The Chinese yuan, a controlled currency, is on the track of liberalization. And this currency is linked with China, a booming economy. So there must be great opportunities.”The China Banking Regulatory Commission said it will scrap the limitation on the number of new branches a bank can establish in the zone per year, ease requirements on the operating years for foreign banks to carry out yuan business and encourage banks in the zone to carry out cross-border financing services.  Liao Min, head of the commission’s Shanghai branch, said the regulator will adjust loan-to-deposit ratios and other regulatory requirements for banks in the zone.The China Securities Regulatory Commission also announced fresh policies for the zone, saying it would allow the establishment of an international oil futures trading platform to facilitate foreign participation in domestic commodities future trading.Foreign and Chinese investors in the zone, including institutions and qualified individuals, will be allowed to invest in securities markets directly across the border, the commission said.The regulator will also allow parent companies of firms based in the zone to issue yuan-denominated bonds in the domestic market.A negative list of 190 items will be released soon to allow more leeway for foreign participants, according to Dai Haibo, deputy director of the zone administrative committee.The negative list, in contrast to a positive list, specifies all sectors in which restrictions will remain for foreign enterprises. It means foreign companies can carry out businesses in any sectors not included in the list.A registration system for setting up an operation in the zone has been introduced to replace the current approval system, which has simplified procedures and reduced processing time from 29 days to four days, Dai said. “We are going to build the Shanghai FTZ as a test bed for pushing forward reforms and opening the economy wider,” Jian Danian, deputy director of the FTZ’s managing authorities, said at the opening ceremony. self storage