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Shanghai FTZ makes big progress in first year, vice mayor says

By Ye Zhen | September 26, 2014, Friday | Online Edition

SHANGHAI’S pilot Free Trade Zone has made significant progress in facilitating trade, boosting investment and promoting financial opening, city officials said today, ahead of the zone’s first anniversary on Monday.

“After one year of practice, Shanghai free trade zone has achieved institutional innovations in foreign investment management, trade facilitation, financial deregulation and government role transformation,” Ai Baojun, Vice Mayor of Shanghai and head of the China (Shanghai) Pilot Free Trade Zone Administration, told a press conference today.

Ai said there has been an increase of foreign investment in the zone since a negative list of off-limit areas for foreign investors was revised earlier this year, which eliminated a quarter of items to offer more freedom for foreign participation.

As of September 15, foreign-funded firms accounted for 13.7 percent of the 12,260 newly-established enterprises in the zone. A total of 283 projects have been settled down in the zone after the regulator introduced 23 measures to open up its services sector wider for foreign investment.

In terms of trade facilitation, the city’s customs watchdog, along with the inspection and quarantine regulator and the maritime authority, have adopted more than 60 measures to help cut logistics and warehouse costs by an average 10 percent and reduce customs clearance time by three to four days.

In response to complaints about slow progress in financial reform, Ai said there are great improvements in terms of interest rate liberalization, capital account opening and yuan internationalization, but also noted that that’s far from enough. 

During the past year, the regulator has made efforts to ease control on foreign exchange settlement for companies in the zone, such as cutting administrative burden and lifting restriction on the amount of settlement. Financial services such as cross-border yuan payment, cross-border yuan financing and cross-border yuan cash pooling for multinationals were also installed in the zone. 

In the first eight months this year, cross-border yuan settlement in the zone reached156.3 billion yuan (US$25.2 billion), representing 15 percent of the total in the city. Yuan funds borrowed from overseas markets totaled 17.4 billion yuan. 

The zone also set up a separate accounting system to manage risks in financial opening. By the end of last week, 10 Chinese banks have been authorized to open 4,110 free trade accounts.

Zheng Yang, director of Shanghai Finance Service Office, said currently financial risk in the zone is manageable as non-performing loan ratio here is only 0.16 percent, much lower than the city’s 0.97 percent.

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