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Free Exchange for Trade Zone
Foreign currency control in the city's State-level special export processing zones will be liberalized thanks to new rules introduced by the People's Bank of China's (PBOC) Shanghai branch.
So far, the regulations only apply to Shanghai Songjiang Export Processing Zone, which the State Council approved as a State-level zone with its own customs system.
The rules have not yet been applied to two other special export processing zones -- Waigaoqiao Free Trade Zone and Jinqiao Export Processing Zone.
The reason, according to one official from the foreign currency administration section of the PBOC's Shanghai branch, is that companies in the Waigaoqiao zone are more complex than those in the Songjiang zone. The Jinqiao Export Processing Zone has not been included because it does not yet have a separate customs system.
"However, we expect there will be more export processing zones like the Songjiang one in the future, to which the new rules will be applied," he said.
Jinqiao Export Processing Zone is now applying for the same status as Songjiang, he added.
The new specifications say that all companies in the zone, either Chinese and foreign, will be able to open foreign currency accounts, for which Chinese companies used to be excluded.
This will give Chinese firms greater ability to carry out international trade.
Companies in the export processing zone will also be allowed to open only one foreign currency account. Previously, they had to have two for different businesses.
The purpose of requiring two accounts was to give the government better supervision of the flow of foreign currency, the spokesman said.
"But this caused a lot of trouble," said Zhang Yanping of Waigaoqiao SU-Development Co Ltd. He said many foreign companies in Waigaoqiao had complained about that situation.
Companies inside the zone have also been given new rights, such as a new rule which means that companies established with renminbi investment are also allowed to purchase foreign currencies with proper certificates.
"They can also ask for loans from foreign organizations without the need to get approval from the PBOC in advance," said the PBOC spokesman.
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