ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Policies in Shanghai FTZ to be implemented 'very soon'
Publication Date : 15-02-2014
A policy package from the central bank for the China (Shanghai) Pilot Free Trade Zone will be implemented "very, very soon", according to a published report.
The Shanghai-based Oriental Morning Post reported on Thursday that six to seven sets of bylaws will be announced by the People's Bank of China (PBOC), laying out details of the 30-point policy guidelines issued earlier.
Those guidelines govern financial reforms in the zone, which is supposed to spearhead the country's economic reforms over the next decade.
The 30-point package focuses on capital account and interest rate liberalisation, but it also touches on other aspects of finance, including fundraising and trading.
The newspaper quoted a source who had seen the draft bylaws as saying "there won't be big breakthroughs, and any reform will focus on serving the real economy".
The PBOC didn't answer calls for comment by China Daily on Thursday.
According to the report, individuals will be free to conduct certain types of financial transactions using income earned in the zone.
Designated financial institutions will be permitted to trade bulk certificates of deposit, a transaction common in developed markets but currently banned in China.
Qualified institutions and individuals will be allowed to borrow yuan-denominated funds overseas, although those funds can't be used to invest in securities or derivatives or lend to other parties.
"It's urgent to spell out policies for the zone so that people know what to do," said Zhang Qi, an analyst with Haitong Securities Co Ltd in Shanghai.
The Shanghai FTZ was launched in September as a trial site for reforms, with successful ones to be duplicated elsewhere in China.
Companies have flocked to the zone in search of reform benefits, with 1,434 enterprises registered in the first 35 working days, including 38 foreign companies.
Many of those companies subsequently found that they couldn't proceed with their business plans because the rules governing the zone were too vague.
By design, economic rules in the zone are supposed to be phased in and constantly revised so that the government will see what works and what doesn't.
But many had complained that the government was moving too slowly. The government, in response, has worked more quickly to provide businesses in the zone with a clear set of rules.
The Shanghai municipal government is reviewing the zone's negative list, which covers the businesses that are either barred from foreign investment or that require advance approval.Revisions are to be announced in the first half of the year.
The 29 square kilometre enclave is growing in economic vigor as businesses get a clearer idea of what they can do and can't do.
Customs figures released on Wednesday show exports from the zone grew 5.2 per cent to 15 billion yuan (US$2.5 billion) in January, compared with October, when the zone began operations. Imports rose 1.5 per cent to 44.5 billion yuan ($7.3 billion).