Exclusive | Legal loopholes prompt China to delay Shanghai free-trade zone rules
The central government had planned to unveil the rules late last month, but policymakers put the lawyers back to work out of concern the legal framework needed tightening
Beijing has delayed the announcement of new rules for its planned free-trade zone in Shanghai as government lawyers attempt to close potential legal loopholes.
The central government had planned to unveil the rules late last month, but policymakers put the lawyers back to work out of concern the legal framework needed tightening, to reduce the risk of legal disputes involving foreign investors, government sources familiar with the matter said.
The ambitious plan for Shanghai is known to have been opposed by some financial regulators, prompting speculation among some sources that the cited legal concerns may be a pretext for some regulators to try to retain their grip on the financial sector.
"Now we have met with the so-called 'legal loopholes' and I don't know if these are just excuses for some regulators to keep their tight control over China's financial industry," a government source said.
Senior officials in Beijing, after consulting government legal experts, realised some of the rules drafted for the free-trade zone were not in line with current mainland financial regulations and relevant laws, one of the sources said.
"Among the 21 points [of new policy initiatives], some now look very tricky. If you announce them and soon begin to implement those new initiatives, there will be a risk that someday the government may be in trouble if a dispute happens between a foreign investor and its Chinese partner," the source said.