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Shanghai FTZ set to announce new policies

2014-02-26 17:50:22   Copy: Global Times

With one month having passed since the launch of the China (Shanghai) Pilot Free Trade Zone (FTZ), more opening-up and reform policies are expected to be announced, media reports said Tuesday.

The FTZ has been operating smoothly since it was inaugurated on September 29, Securities Times reported Tuesday, citing Yang Xiong, mayor of Shanghai.

A total of 208 firms were registered to operate in the FTZ from October 1 to 27, the newspaper said, citing statistics from the Shanghai Administration for Industry and Commerce.

Financial reform measures such as opening the capital account, cross-border use of yuan and market-driven interest and exchange rates will gradually be launched, Yang was quoted as saying.

Seven banks in the FTZ will be allowed to set up offshore accounts, as the latest measure in opening the capital account in the zone, Caixin reported Tuesday citing unidentified sources.

Sheng Jianqiang, the owner of a trading company in the FTZ, told the Global Times Tuesday that he has opened an offshore account with Bank of China in the zone, but his firm has not started the business yet.

"I hope that the Shanghai FTZ will be similar to the Hong Kong offshore market," Sheng said.

Market enthusiasm has been strong since the State Council's ­approval of the FTZ on August 22.

Investors rushed to buy FTZ-related shares, which boosted the share price of Shanghai Waigaoqiao Free Trade Zone Development Co to a record high of 57.74 yuan ($9.4) on September 26, an increase of about 280 percent in less than a month.

"We have enjoyed simplified procedures and faster service during the registration," an office manager surnamed Tang at Almaco Group Shanghai, a newly established shipping and marine supplier in the FTZ, told the Global Times on Tuesday. Tang noted that the company hopes to save on import duties and taxes by operating in the zone.

Commercial property prices in the FTZ have risen sharply, fueled by the number of new firms registering there. The current office rental price in the FTZ has doubled since August, according to media reports.

However, after a series of supportive measures were released just after the launch of the zone, the market frenzy faded somewhat, and the share price of Shanghai Waigaoqiao has fallen by 30 percent from its peak on September 26.

Many said that the FTZ was not as open as had been expected.

On September 29, the day of the FTZ inauguration, the Shanghai government announced that foreign investors would not be subject to ­administrative approval for investment so long as their business is not specifically listed in 18 categories, including entertainment, education and the financial sector.

This move was criticized by some as representing another version of ­existing restrictions on foreign investment.

A lack of concrete measures for opening of the financial and services sectors, two key aspects of the FTZ, led to some disappointment, Zhang Youwen, a research fellow at the Shanghai Academy of Social Sciences, told the Global Times Tuesday.

Opening of the financial sector is the most difficult part for the FTZ, as financial risks could spread nationwide without careful planning and supervision, Zhang said.