The approval of the establishment of Shanghai free trade zone (FTZ) was considered a significant step of further financial reform and opening up to adapt to the global economic and trade development, according to experts.
China’s Ministry of Commerce (MOC) announced Thursday that the central government had approved the establishment of the pilot zone, following some guidelines released by the city.
The guidelines detailed measures to allow more private capital in the banking sector and promote cross-border use of RMB.
Covering 28.78 square kilometers, the FTZ will be built on the basis of the existing bonded zones -- Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.
According to the statement of Ministry of Commerce, the move will help explore a new path for China's opening up, speed up transformation of government functions and promote economic restructuring.
"This move marked a new achievement of China's opening-up strategy, with the significance no less than the establishment of Shenzhen Special Economic Zone and Shanghai Pudong New Area." said Bai Ming, a researcher with the Ministry of Commerce.
"The FTZ is not a special zone or new area. Its significance lies not in striving for preferential policies but in establishing a new system in line with international standards and realizing highly efficient management in sectors like investment and trade," said Zhou Zhenhua, director of the Shanghai Municipal Government Development Research Center.
Experts also predicted that the FTZ will give Shanghai the role as a "free port" of RMB's internationalization.
The function of the FTZ will involve interest rate liberalization, currency free exchange, financial industry's opening-up, financial service innovation and some other offshore financial services, said Xu Quan, an official with the Shanghai government's financial office.
In the meantime, many companies are already busy working to adapt to the coming dramatic moves of vital significance.
For instance, the Shanghai Pudong Development Bank is one of them.
The bank has set up a team to prepare for the establishment of the new zone, said Ge Yufei, vice-president of the bank's Shanghai branch.
“Our initial plans include setting up an office within the area, and developing innovative products and services to meet various demands,” he said.