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FTZ trials aimed at speeding up reforms

China Daily, May 21, 2014

• The pilot free trade zone, as a pivot to Shanghai's goal of becoming a global financial and trading center, is experimenting with scores of trials to accelerate policy reforms, Zhu Min, vice chairman of the China (Shanghai) Pilot Free Trade Zone Administration, said yesterday.

  "We have beefed up efforts on innovations in investment administration, trade regulation, customs regulation and financial systems," Zhu told reporters covering the 4th Summit of the Conference on Interaction and Confidence Building Measures in Asia in Shanghai.

  "The free trade zone is undertaking the mission to accelerate reforms in two-way trade and investment, and push forward the transition where the government's role fades and the market has a bigger say," Zhu said, noting the zone has made anticipated progress since its debut in September last year.

  The 28-square-kilometer zone has served as testing ground to trial further deregulation of the nation's financial services. A string of reforms has been announced, including freeing up interest rates, expanding cross-border use of the Chinese currency, the yuan, and promoting yuan convertibility under the capital account.

  Vice Mayor Tu Guangshao said on Monday that the negative list, a trial approach of administrative management in the FTZ, will be shortened by one third in its 2014 version compared with the current copy, an indication of Shanghai's determination to deepen reforms.

  Zhu said his administration has been working hard on drafting the new negative list, which will make adjustments in both length and content.

  Many trials have been launched in the zone, with industry watchers calling them the most aggressive in more than a decade.

  In February, China's central bank fully liberalized interest rates on foreign-currency deposits in the zone, laying the foundation for the deepening of interest-rate liberalization nationwide.

  The People's Bank of China has also clarified rules for companies in the FTZ to borrow yuan from offshore. Third-party payment firms have been allowed to settle payment in yuan for transactions between foreign e-commerce websites and domestic firms and individuals.

  Meanwhile, domestic and foreign banks have launched a yuan cross-border pooling solution for clients in the zone.

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