Reforms in the Shanghai Free Trade Zone

Reforms in the Shanghai Free Trade Zone



Reforms in the Shanghai Free Trade Zone
 
Now for more on the Shanghai Free Trade Zone, we are joined in the studio by my colleague Wu Haojun.
 
Q: There were a lot of hopes for the Shanghai Free Trade Zone when it was launched. So now a year later, has its performance lived up to expectations?
 
Wu: Well, Shanghai’s Party Secretary Han Zheng says achievements in the free trade zone have been better than expected. To begin with, there was certainly no lack of fanfare surrounding the pilot zone, here and abroad. As of September 15th this year, 12,266 companies had set up in the zone. Foreign companies accounted for 13.7% of them. And one of the major aspects is of course the often talked about negative list. By June, the list has been shortened from 190 items to 139. And also, it’s important to keep in mind that whatever reforms that have been implemented within the Shanghai Free Trade Zone are not limited to the zone itself. As the Shanghai Party Secretary said, this is a testing ground for all of China, not Shanghai’s private plot. In the past year, 21 reforms that were first implemented there have gone nationwide. And the government is evaluating more than 30 reforms that will go nationwide when conditions permit.
 
Q: What are some areas that businesses, especially foreign investors want to see more reforms in?
 
Wu: There are certainly some areas where investors and companies are hoping for even more reforms. The Shanghai Free Trade Zone was promoted as an incubator for financial revamps such as interest-rate liberalization and easier cross-border capital flows that would eventually be extended to the whole country. Most of the reforms on this front, some say, have been more modest than they hoped for. Modest overhauls include a measure to allow companies registered in the zone to borrow the Chinese currency from offshore and another allowing companies to transfer yuan-denominated funds between their entities registered in the free-trade zone and those offshore or on the rest of the mainland. But there should be no doubt about the government’s will to pilot financial reforms at the free trade zone. The latest effort is an international trading platform at the Shanghai Gold Exchange, which will allow investors to price and trade gold using the Chinese currency. And Premier Li’s surprise visit at its debut should be a confidence boost to businesses and investors.

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