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  • Oct 17, 2014
  • Updated: 10:53am
NewsChina
ECONOMY

State Council gives green light to Shanghai free-trade zone

PUBLISHED : Thursday, 04 July, 2013, 12:00am
UPDATED : Thursday, 04 July, 2013, 3:53am
 

In a move underlining the leading role Shanghai will play in the country's economic future, the cabinet has formally endorsed the city's plan to open the mainland's first free-trade zone.

The free port will be a testing ground for major policy reforms to free up cross-border commodity and capital flows, areas in which it threatens to eclipse Hong Kong's traditional contribution to the national economy.

The State Council said in a statement after a meeting chaired by Premier Li Keqiang that the free-trade zone would be a snapshot of an "upgraded Chinese economy".

Economists said the plan, aimed at eventually creating a "mini-Hong Kong" in the mainland's commercial hub, would benefit Shanghai as the city sought new engines to revive its slowing economic growth.

"The approval will help China gain new advantages in global competition," the cabinet statement said. "It will help build a new platform for economic co-operation with other countries and pave the way for further economic growth."

Initially, Shanghai will upgrade and expand its existing four bonded areas, where goods can be imported, processed and re-exported without the intervention of customs authorities.

Government officials said the free-trade zone would eventually become a large territory and undertake financial liberalisation.

Xu Quan, a deputy director of the Shanghai Financial Services Office, told a financial forum last week that reforms of interest rate and exchange rate mechanisms would be carried out in the free-trade zone.

"The city's officials, confident of Shanghai's future role in the regional economy, however, are going to take a go-slow approach in implementing liberalisation," said a local government official.

"Shanghai is pinning its hopes on the free-trade zone to raise its international profile."

Shanghai's economy has grown more slowly than those of most other provinces and municipalities since 2008.

Its ambition to become a global financial centre by 2020 was regarded as empty talk while the previous top leaders remained reluctant to approve major financial liberalisations in the city.

The new leadership, including Li and President Xi Jinping , which is seen as being more reformist, is believed to be more supportive of Shanghai's growth. In 2007, Xi had a brief stint in Shanghai as its party secretary before election to the Politburo Standing Committee.

Last month, the Post reported that Fang Xinghai, former head of the Shanghai Financial Services Office, who once downplayed Hong Kong's importance as a financial hub, had been named a senior official of the central leading group for financial and economic affairs in Beijing.

 

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yvonneau
Why do they call it the first FTZ in China?
In Shanghai, there is Waigaoqiao Free Trade Zone and two others?
Can anyone tell me the difference?
Carparklee
Good question. I don't know the exact difference as well. After all, Chinese terminology should be sought for correct and accurate understanding. I think the FTZ in waigaoqiao may only accommodate facilities or business activities of bonded warehouse. I think the FTZ concept of shanghai the report concerns about might include a much more wider scope in which , manufacturing might be accommodated as well. ?
Carparklee
I think this policy advancement is not targeting any particular area but posting competition and challenges to the pan Pear River Delta area. As of today, it is only the factories located in Guangdong province can enjoy the import duty and VAT exemption as long as the final ultimate finished products will be exported. In other districts in other provinces, exemption for export still requires deposit first and the refunding period could be long enough to get the owner to feel the capital pressure. Now, Shanghai is going to have a similar policy. The crown of World Factory is no longer a sure thing for Dongguan, Shenzhen or neighboring cities in PRD as the competition from SEA countries is getting close. Now, you have Shanghai FTZ to join the party. What will happen soon to the manufacturing industries in Hong Kong's backyard PRD area? What will happen to the head offices owning and running these factories in Hong Kong? What will happen to the associated service industries such as finance, banking, shipping etc. ? Is it high time for Hong Kong and Guangdong PRD governments to sit down and get united to plan ahead on how we should respond to such a challenge or opportunity?
VicSexton
Great idea - but can the CCP keep it's controlling & corrupt hands off this zone? If so it has a chance but I'm sure you'll forgive me for some good old Western-style cynicism.
captam

Sorry error. Moderator please delete.
supremeleo
Heads up to Hong Kong, SH is cathing up. If we don't move forward, we recede
lib_prc

China is spoon-feeding HK but HK does not know what China wants...it will take Shanghai a long time though; it is a city that needs love...
alexchankc
It is quite clear that given the endless antagonism of some Hongkongers against the Mainland, Beijing has had enough of this and is finally scaling back economic policy support for the HKSAR.
Actually, a fair deal. Why should Hong Kong be treated any special. After all, all human are created equal. For those who claim themselves “global citizens”, no complaints if others in less developed areas could advance in life & economic well-being through their personal efforts,
lucifer
"finally scaling back economic policy support for the HKSAR"
What policies are those? Allowing Mainland tourists the freedom of travel to Hong Kong - causing all kinds of price and property dfistorions? I guess France shoiuld thank China for its favourable policies toward France too.
How about using Hong Kong stock exchanges to raise capital and foriegn exchange for its SOE's, because its own exchanges don't work and generally don't allow foriegn investment.
Or maybe using Hong Kong as a place to experiement with the Internationalization of its currency?
Or how about the policy of saving Hong Kong from the threat of a pluralistic and democratic political system that will surely enslave and doom them?
I think the policies you mnetioned were deisgned to help China under the guise of helping Hong Kong. Hong Kong has seen very little benefit from China's so called favourable policies toward Hong Kong, and many drawbacks.
captam

Spot on!
The Mainland continues to move ahead improving the livelihood of its citizens year by year, while HK pan-democratic "nutters" throw bananas and wave colonial flags, dreaming of becoming another Middle-Eastern style "democracy". When the ship here finally begins to sink, they'll be demanding 'one man one boat' in place of one vote.
 
 
 
 
 

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