China unveils policy package for Shanghai Free Trade Zone

HONG KONG - China’s State Council today approved the policy package of the Shanghai Free Trade Zone (FTZ) in a move which ANZ Bank says indicates that China’s financial sector reforms and capital account convertibility will accelerate. The policy document encourages RMB convertibility, interest rate liberalisation, and further cross-border usage, while companies located in the FTZ are encouraged to take advantage of both onshore and offshore markets.

Within the Shanghai FTZ, policy will be to further open up the financial services industry to both private and foreign capital, and to encourage establishment of foreign-owned banks and Chinese-foreign joint venture banks. The policy will also allow establishment of a trading platform integrated with global markets, and gradually allow the foreign companies within the Shanghai FTZ to engage in commodity futures trading. It will also encourage financial innovation.

Policy within the Shanghai FTZ will lower the barrier for foreign investors seeking to enter the service industry, including engineering, construction, financial leasing, shipping, cultural services, and professional services. And it will adopt a “negative list” approach and new investment rules in accordance with international practices. For example, foreign investments in the FTZ and overseas investments by local enterprises will not require official approval from Government agencies – they will only need to follow the “archival filing management” process. www.live.anz.com (ATI).