President Xi Jinping paid an unexpected first visit to the Shanghai free-trade zone yesterday.
Xi, together with the local Shanghai Communist Party chief Han Zheng and Mayor Yang Xiong, visited several locations and greeted local staff, according to a source who accompanied Xi. The Hong Kong-style economic zone was launched last October.
The zone is considered an integral part of China's economic and foreign exchange reform under Xi's leadership.
Xi has been in Shanghai this week for a regional security summit where he met Vladimir Putin and signed a gas deal worth US$400 billion with the Russian president.
The Shanghai free-trade zone had been widely considered a policy initiative driven by Premier Li Keqiang. But Li failed to attend the launch ceremony of the economic zone, instead sending ministerial-level officials to Shanghai in his place.
This fuelled speculation over how committed China's top leadership was in supporting the free-trade zone and economic reform in general.
Yesterday Xi "highly praised the work that has been done so far in the Shanghai free trade zone", one source at the site said, who declined to be named as he was not authorised to speak to the media. "Everybody is so happy and Xi apparently is in a very good mood after the summit," said the source, referring to the regional security meeting.
"People used to ask why Li Keqiang didn't come to the zone [for the launch ceremony]. Now Xi has come, so I guess there's nothing to worry about anymore over whether the central government supports the free-trade zone or not," said the source.
Shanghai vice-mayor Tu Guangshao on Thursday heralded further financial liberalisation in the zone, fuelling speculation about future full convertibility of the yuan in the test bed for mainland economic reform.
The People's Bank of China allowed companies registered in the zone and foreign institutions to open special bank accounts yesterday. Capital will be allowed to be freely converted and transferred between overseas accounts and zone accounts, known as "offshore accounts".
However, the move falls short of full convertibility of the yuan, with the central bank saying regulators will monitor capital flows closely and suspend transfers if they spot irregularities in cross-border transactions.
Although Tu did not explicitly spell out that the policy would pave the way for a fully liberalised capital account in the zone, he sent a clear message that the long-expected deregulation was in the pipeline.