TRADE, FINANCE BENEFIT MOST FROM PILOT ZONE
Trade and financial services are among the sectors that have been benefiting themost so far in the China (Shanghai) Pilot Free Trade Zone, analysts said in a halfyear reviewofmeasures and policies for development in the zone.
Free trade accounts and a capital market for foreign investors are among the itemsmost expected to attract businesses.
Pilot financial liberalization schemes will soon include a free trade account and a capital market for foreign investors, saidDai Haibo, deputy director of the FTZ administration committee, setting a timetable for the launch of both the free trade account and crude oil futures. Hewas speaking at a news conference on Tuesday.
The expectedmove will affirm the renminbi as one of the leading currencies in today’s rapidly evolving financial arena. It will secure cheaper funding for local companies fromoffshore sources, according to Zhang Xiaomeng, branch manager of Citi’s Shanghai FTZ sub-branch.
Specific rules on the free trade account that allows full convertibility of the yuan and facilitates offshore financing will be rolled out in the second quarter and tested so they can be applied elsewhere in China by September, which will mark the FTZ’s anniversary, according toDai.
Proceduralmoves by the People’sBank of China, the central bank, have allowed employeesworking in the FTZ to set up accounts for offshore investments, which ease restrictions on money flow, paving theway for substantial reforms.
According toQu Hongbin, HSBCHolding Plc’s chief economist for Greater China, the nation has a three-pronged approach to renminbi internationalization: Expand the currency’s role in foreign trade settlement (it has already overtaken the euro to becomesecond to the dollar), encourage its use in cross-border investment and develop offshore renminbi centers.