A port in the Shanghai FTZ. (Photo/Xinhua)
The Shanghai Free Trade Zone officially opened on Sept. 29, with China's government unveiling 55 pilot policy details with an additional 43 policies expected to be announced by the end of this year. The aggressive move is being touted by the central authorities as the country's third wave of opening and reform since the establishment of special economic zones in the 1980s and the country's entry into the World Trade Organization in the late 1990s, says Caixin's Century Weekly magazine.
Beijing will most likely adopt the model in other cities if Shanghai proves a success. FTZs could be part of the central government's newly devised "stimulus" program to encourage quality growth in a slowing economy, the magazine said.
FTZ operations will at least boost related stocks or properties, according to analysts. Several cities have already announced their own proposals for FTZs.
The emphasis of the reform experiment is not on government incentives and policy preferences but rather an innovation in market economics, the magazine said. The FTZ is a pilot zone which may help to form national policy promoting reform through opening up institutional innovation.
In terms of the liberalization of foreign exchange, the Shanghai FTZ is open to offshore business, is opening and innovating the financial sector and its products, and allows domestic and international investment, the magazine said. According to the latest statistics on the Bank for International Settlements, out of the global daily foreign exchange transactions of US$5.3 trillion, the daily transactions of renminbi has expanded to US$120 billion, lifting the renminbi to one of the top 10 most actively traded currencies for the first time. The FTZ's opening will become an engine and platform for the more frequent use of the Chinese currency internationally, Century Weekly said.
All trading nations are actively urging for reform in various international trade agreements such as the Trans-Pacific Strategic Economic Partnership. Testing open trade on home ground will give China the room for internal reform and the experience to negotiate with the United States in an investment agreement, the magazine said.