Shanghai FTZ signals further reform, opening up

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The approval of establishment of a pilot free trade zone (FTZ) in the eastern business hub of Shanghai indicates an important move for China's further reform and opening up, analysts say.

The Ministry of Commerce (MOC) announced Thursday the State Council had approved the establishment of the pilot zone on the basis of existing bonded zones in Shanghai, as a crucial move in adapting to global economic and trade development and imposing a more proactive opening-up strategy.

Zhu Jianfang, chief economist at Citic Securities, said the "negative list" approach, which the FTZ will adopt, showed a thinking of power delegation.

"We can no longer rely on preferential policies to improve business and the investment environment. Rather, we should attract investment with highly efficient and transparent administrative services," said Zhang Youwen, an economic researcher at the Shanghai Academy of Social Sciences.

In the FTZ, the reforms featuring power delegation will be deepened and financial, business, cultural, education and medical services, which faced many restrictions before, are expected to enjoy more development opportunities, analysts said.

Service trade is a key sector in an FTZ and thus the service industries will see both challenges and opportunities, according to Chen Bo, an economic and trade expert at Shanghai University of Finance and Economics.

Financial reforms will be accelerated as the marketization of interest rates has been a trend, according to experts.

"The FTZ is not a special zone or new area. Its significance lies not in striving for preferential policies but in establishing a new system in line with international standards and realizing highly efficient management in sectors like investment and trade," said Zhou Zhenhua, director of the Shanghai Municipal Government Development Research Center.

• China approves pilot free trade zone in Shanghai
• Shanghai eyes FTZ trial possibilities
• Tianjin, Xiamen also plan to set up FTZs

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