Shanghai gets go-ahead for free-trade zone
CHINA has formally approved the establishment of a free-trade zone that will trial yuan convertibility in Shanghai, the official China Daily reported yesterday.
State media had reported early last month that approval of the zone was imminent, but details were scarce on the precise nature of the policy initiatives being contemplated.
The latest report said that the zone would also serve to concentrate logistics and communications assets, and provide tax advantages to resident firms.
China's new leaders have signalled that they want to quicken the process of making the yuan fully convertible over the next few years, as part of efforts to boost the currency's use in trade and support wider financial reforms.
Shanghai officials have been lobbying China's State Council - the country's Cabinet - for permission to open a pilot project to experiment with capital-account liberalisation and yuan convertibility, concerned that the city could be left behind as rival financial centres, such as Hong Kong and Taiwan, move to develop cross-border yuan financial services.
Another free-trade zone, the Qianhai zone near Shenzhen, already allows banks from neighbouring Hong Kong to offer cross-border yuan-denominated loans to mainland companies in the zone.