Shanghai FTZ reform in full swing

0 Comment(s)Print E-mail Xinhua, October 29, 2013
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China's first experimental free trade zone (FTZ) in the economic hub of Shanghai has forged ahead since it opened a month ago, turning a new page for the world's second largest economy.

Since the opening of the China (Shanghai) Pilot FTZ, its service center has been busy with people eager to register companies.

As of Oct 23, 157 firms, including 135 Chinese and 22 foreign-funded ones, have been registered in the zone. They have a combined registered capital of $829 million, according to sources with the administration of the service center.

Most of the companies are engaged in trade and service businesses, the sources said.

The service center, which opened on Sept 29 when the FTZ was launched, processes paperwork under a more streamlined and unified procedure.

Business license approvals, which used to take about one month, can now be offered within four working days, said Fang Yushu, who has registered his insurance company.

The zone has become a hit, attracting visitors both online and offline.

Since the start of registration services on Oct 8, the service center has received nearly 2,300 enquiries and registrations each day, while daily visits to the FTZ's website averages 1.8 million.

Experts say the zone will be a testing ground for bolder market-based economic reforms in the upcoming decade so as to further boost economic vitality.

A range of sectors from financial services and medical care to shipping and education will be open for foreign investment.

On Sept 30, the FTZ's administrative commission published a "negative list" of 190 restrictions that limit foreign investment in such sectors as banking, insurance and the hospitality industry.

Regarding the negative list, Shanghai mayor Yang Xiong said on Sunday that the current version is only applicable for this year and would be renewed and shortened each year for 2014 and 2015.

"I believe that as our work deepens, the negative list will be shortened gradually," Yang told a press conference at the conclusion of an annual gathering of international advisors to the city government.

The FTZ will also be the outpost to test full convertibility of the Chinese currency renminbi, its use across national borders and liberalized interest rates.

The FTZ is currently in close contact with China's central bank, as well as the country's top banking, securities and insurance watchdogs to work out detailed plans to regulate freer financial activities within the zone.

So far four foreign banks -- Citibank, Development Bank of Singapore, Bank of East Asia and HSBC -- have established presence in the zone.

By loosening restrictions on foreign investment and a gradual relaxation of capital account, authorities want to see what works and what does not in an isolated area along the Yangtze delta and prepare for what can be implemented nationwide.

So the zone's mission, suggested by officials and analysts alike, is not to create another special economic zone with loose regulations and preferential policies, but to experiment with caution a set of reform measures deemed necessary to revitalize the world's second largest economy.

"We hope that the building of the FTZ will be an orderly reform rather than a once-and-for-all attempt that will bring chaos in supervision," said Lewis Lu, a partner with KPMG Advisory (China).

While authorities should take bold steps in liberalizing formerly closed sectors, they should also improve oversight with detailed and implementable policies, Lu added.

China vowed to open 23 areas across six industries in the service sector in the FTZ, according to a statement released prior to its opening. So far, 12 areas are ready for opening and seven are pending policy adjustments from the State Council, or China's Cabinet.

Another four areas involving shipping, banking and legal services still await detailed regulations from related state departments.

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