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  • Dec 23, 2014
  • Updated: 8:11am

Shanghai Free-trade Zone

Shanghai Free-trade Zone is the first Hong Kong-like free trade area in mainland China. The plan was first announced by the government in July and it was personally endorsed by Premier Li Keqiang who said he wanted to make the zone a snapshot of how China can upgrade its economic structure. Other mainland cities and provinces including Tianjin and Guangdong have also lobbied Beijing for such approvals. The Shanghai FTZ will first span 28.78 square kilometres in the city's Pudong New Area, including the Waigaoqiao duty-free zone and Yangshan port and it is believed it may eventually expand to cover the entire Pudong district which covers 1,210.4 sq km of land.

NewsChina

Shanghai free-trade zone policy initiatives announced ahead of launch

PUBLISHED : Friday, 27 September, 2013, 8:51pm
UPDATED : Saturday, 28 September, 2013, 9:26am

China announced 18 new policy initiatives for its first free-trade zone in Shanghai, reducing restrictions on six key industries, including financial services and telecommunications.

The free-trade zone, to be officially launched on Sunday, is a major step to further liberate the world’s second largest economy. Chief Executive Leung Chun-ying on Friday called it an “irresistible trend”, but said it would not threaten Hong Kong’s position as an international financial centre.

The setting up of the free-trade zone is widely seen as one of the key reforms to be introduced under Xi Jinping’s leadership. But it remains uncertain how far the government is ready to go. Some of the boldest ideas – such as breaking the state monopoly over internet, data transmission and storage business - are still under discussion and may require special permission.

Premier Li Keqiang, the driving force behind the free-trade zone idea, is eager to see it as a testing ground for wider and deeper financial reforms. He earlier said the central government would copy the Shanghai model to the rest of the country if it proved to be successful. State media compared it to Deng Xiaoping’s creation of the Shenzhen Special Economic Zones some three decades ago.

Just like Deng, Li faced serious, at times open, resistance from entrenched interest groups.

Most of the new rules introduced on Friday have been reported earlier by the South China Morning Post, such as the further liberalisation of the foreign exchange regime in the special zone.

The Post on Wednesday also reported that Beijing is considering lifting a ban on internet access to Facebook, Twitter and news websites within the free-trade zone to attract foreign investors and professionals to the zone.

The idea seems to have run into resistance from the conservatives. The People’s Daily on Friday ran a commentary by a government researcher warning of the potential political risks such a move would entail. The article compared lifting the internet ban to the creation of “foreign settlements” in Shanghai under unequal treaties forced on China by imperial powers a century ago.

The article defended the need for internet controls and said “even if one day the free-trade zone does get rid of the [internet] firewall, it would be part of a synchronised effort by the country as a whole.”

“Undeniably, the importance of the firewall will gradually weaken until one day when it will be phrased out. But that will be the result of China’s growing overall strength and confidence, and ... the balance of power between China and the US hegemony. It can not be forced.”

Among the key industries facing reduced restrictions is that of banking and financial services.

Beijing will allow foreign banks to skip long and often bureaucratic approving processes when setting up their wholly owned units in the free-trade zone.

It often took a few years for a foreign bank to first set up a symbolic representative office in China and then upgrade it to a full-service branch.

Peter Wong, chief executive of HSBC Asia Pacific said in a statement that the free-trade zone in Shanghai “will open a new phase in China’s financial reform process, bringing greater flexibility and fresh options to the heart of the world’s most dynamic economy.”

In August, Beijing gave final approval for Shanghai’s free-trade zone, which will span almost 29 square kilometres in the Pudong New Area of Shanghai, which includes the Waigaoqiao duty-free zone, Yangshan port and the international airport area. The Post reported the zone might eventually be expanded to cover the entire 1,210 square kilometre Pudong district if it proved to be a success.

 

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This article is now closed to comments

hodfords
"Free Trade Zone" is a catchy name.... If the only thing this free-trade zone has to boast is relaxed Facebook access then it is not much of free-trade zone....
If free trade zone means no duty on import items (e.g. wines, milk powder, handbags, etc. ) then nobody woud import anything through the other ports in China.... If free trade zone means free Yuan convertibility then everyone would flock here to exchange money out of the country and the 20,000 RMB/day limit would be null and void.... If free trade zone means foreign firms can offer all the same financial services as local firms then everybody will go there for their financial services and the rest of China's financial services industry would collapse....
If SCMP and other media outlets can only cite one single tangible difference about this free trade zone and the rest of China (ie. the lifting of Facebook ban) then it's pretty sad.... Facebook doesn't really have much impact on Trade, Finance or Commerce?!?!
Can anyone in the media actually enlighten us with some policies that bear relevance to the concept of "free trade" that this zone has to offer? I have searched the entire web for the last hour and cannot find the details of 18 new policies for this Free Trade Zone....
hodfords
I have finally found the 18 new policies..... The official site is here:-
****finance.china.com.cn/news/special/shzmq/20130927/1843576.shtml
You can plug the content through Google Translate and you can see that the lifting of Facebook is about the only newsworthy policy; the rest are just window-dressing such as The foreign firm can open up a joint-venture company with reduced registered capital....
I think a more appropriate name for this zone should be "Increased Facebook Access Zone"... since there is nothing really significantly different about this zone to the rest of China....
The FTZ actually stands for "Facebook Twitter Zone"
Mingbak
If it fails, the country fails. There's a lot waged on this initiative
swami.vas
The opening of Shanghai Free Trade Zone is yet another indication of what is in store for the Chinese economy in the years ahead and it should be welcome as a right move by one and all, especially the people of Hong Kong. There has of course been understandable concern about its impact on Hong Kong but as the last thirty-five years or so of Chinese economic development has shown, Hong Kong will continue to and should indeed be highly useful to further developments in China and at the same time Hong Kong should benefit too from the rapid economic progress anticipated in China in the next two decades or so!
gcmaster
我三十岁的时候
他们要称我杭州之虎
hkbulib2
you may wanna re-post your comment to hkgolden.com

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