The author is ANZ (The Australia and New Zealand Banking Group) Research
China’s State Council approved the policy package of the Shanghai Free Trade Zone (FTZ) today, indicating China’s financial sector reforms and capital account convertibility will accelerate.
We would like to highlight a few measures in the package. First, it will encourage RMB’s convertibility, interest rate liberalisation, and further cross-border usage.
The companies located in the FTZ are encouraged to take advantage of both onshore and offshore markets.
The policy will further open up the financial services industry to both private and foreign capital, and encourage setting up of foreign-owned banks and Chinese-foreign joint venture banks.
It will allow setting up the trading platform integrated with the global markets, and gradually allow the foreign companies to engage in commodity futures trading and encourage financial innovation.
It will lower the barrier for foreign investors to enter the service industry, including engineering, construction, financial leasing, shipping, cultural services, and professional services.
At last, 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, but only need to follow the “archival filing management” process.
(The article has been edited for clarity)