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China launches pilot free trade zone in Shanghai

The China (Shanghai) Pilot Free Trade Zone was launched this morning, marking a trial run for groundbreaking changes to free up cross-border commodity and capital flows in the world’s second largest economy.

A first batch of 25 Chinese and overseas companies were granted the licenses to register in the trial zone this morning.

China on Friday unveiled a detailed plan for the pilot free trade zone. The country will allow free yuan convertibility under the capital account, interest rates liberalization and cross-border use of yuan in its first free trade zone on a trial basis as long as the risk is controlled.

The government said it will also establish a suitable foreign exchange management system for the zone to facilitate trade and investment.

The FTZ will allow the market to decide prices of financial institutions’ assets, a process known as the securitization of those assets, as policy-makers hope to catalyze further reforms through such an experiment.

The free trade zone, launched today, integrates four existing bonded zones — Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.


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