FTZ to define development (2)

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(China Daily) 10:13, September 28, 2013

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"These steps are all part of China's long-term blueprint as the government tries to shift the economy away from a reliance on investment toward more innovative industries," said Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, which represents around 3,600 US businesses operating in the city and its neighboring provinces.

"One thing significant about the zone is its relationship to China's economic reform agenda. Because there are a lot of talks about the need to rebalance the economy and make it more market-oriented, the FTZ is a signature piece for the whole process," he said.

On the financial front, the test zone will encourage yuan's convertibility, interest-rate liberalization, and further cross-border interaction, so that companies in the FTZ will be encouraged to take advantage of both onshore and offshore markets. One thing worth noting is that it will allow the setting up of a trading platform integrated with the global markets and gradually allow foreign companies to engage in commodity futures trading and encourage financial innovation, said a report by the research arm of the Australia and New Zealand Banking Group.

The guideline also provides an equal market access to foreign investors by scrapping technical restrictions and lowering quality standards in six areas ranging from finance and shipping to commercial and cultural services.

The establishment of the free trade zone is likely to ease concerns over market access, which is identified as one of the major non-tariff obstacles, said Gerry Mattios, principal of consultancy Bain & Co.

"I think a lot of companies are looking forward to the zone to overcome this barrier, because it is expected to enable foreign companies to set up operations more easily and consequently facilitate trade," he said.

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