Shanghai FTZ launch serves as stepping stone to further financial reforms in China
Establishment of the new free trade zone in Shanghai potentially challenges Hong Kong’s reputation as the premier renminbi clearing hub. September 30, 2013 | Alice YangSince its inception in July 2013 to establishment on 29th September, the Shanghai Free Trade Zone (FTZ) has attracted global attention. Through its launch, the Chinese government aims to further liberalise convertability of the renminbi and free market-oriented interest rates. "Under the pre-condition that risk can be controlled, convertibility of the Renminbi on the capital account will be conducted in the zone, the first to carry out and test (it)," an internal Chinese government document about the FTZ launch read. According to the State Council's overall plan, the free trade zone covers five major missions and policies, including 1) speeding up government function transition, 2) expanding investment areas, 3) promoting trade development, 4) deepening financial innovation and 5) improving legal system protection. The first Hong Kong-like free trade zone in mainland China, Shanghai FTZ was personally endorsed by premier Li Keqiang. Pointing out that further reforms were necessary to stimulate domestic demand, Li opined that Shanghai was the perfect venue to conduct such a project, given that the trade volume of Shanghai's tariff-free zones represented more than $100 billion in 2012, or 3% of China's overall trade volume. Covering 28.78 square kilometers and incorporating the special custom zones of Yangshan Deep Water Port, Pudong airport and the Waigaiqiao port, Shanghai FTZ will explore investment and trade policy innovations and expand the opening of the domestic services industry. The free trade area will also provide what aims to be world-class transport and communications facilities and a tax-free environment for domestic and foreign enterprises in order to act as a major hub of their supply chains in Asia. Shen Minggao, chief china economist at Citibank China, expressed concerns on resulting competition with and pressure on Hong Kong as a renminbi hub. “As the development of mainland China continues, it is quite normal that t... Please login to read the complete article. If you already have an account, you can login now or subscribe/register.
Categories: Cash, Treasury & Trade, China, Hong Kong, Rmb, Transaction Bankingcash,China,HK,Rmb,Transaction Banking, Cash, Treasury & Trade,China,Hong Kong,Rmb,Transaction Banking, Keywords:Shanghai FTZ, Trade Settlement, ANZ Hong Kong, Liu Ligang, Citibank China, Shen Minggao, Sibos 2013 Shanghai FTZ, Trade Settlement, ANZ Hong Kong, Liu Ligang, Citibank China, Shen Minggao, Sibos 2013
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