A major concern is that the existing control liberalization could increase exposure to risks and imported effective mechanisms are needed to keep them controlled
The pilot China Free Trade Area (FTA) in Shanghai area is not just a place with special regulations, but also pioneered reforms to the rest of the country, according to several officials and experts. Since the area was established last September, the corporate community has tried to benefit from the environment promised international trade standard, while authorities in other parts of the country, who want their own FTAs have been watching an envious way.
So far, as recorded at least 20 local governments have submitted proposals for areas like claiming its "only" advantage. The frenzy starts the FTA before the opening of Shanghai. Last year, China's southern province of Guangdong announced an update to its "special economic development zones", calling them "trade zone" and boasting an unrivaled connection to neighboring Hong Kong.
This year, more Chinese provinces were prepared to join the group. The coastal city of Qingdao, in northern Shandong province wants to take advantage of its proximity to Japan and the Republic of Korea, and the city of Xiamen in eastern Fujian province, wants the same thing with the island of Taiwan. Meanwhile, the southwestern municipality of Chongqing argues that opens the vast western region.
Despite all the proposals, the Chinese authorities have shown no signs of attempting to pass another similar area.
During a forum held last Tuesday on financial innovation in Shanghai, this metropolis officials and reiterated the involvement of ZLC experiments in the area and added that only make sense in the event that best practices in the area can be applied elsewhere in the country. The success of the FTA depends on the creation of a system that can be played.
To ensure its success, the deputy mayor of Shanghai, Tu Guangshao said that activities in the area should correspond to the reform plan for the whole country and evidence of the area should be made with caution.
A major concern is that the existing control liberalization could increase exposure to risks and imported effective mechanisms are needed to keep them controlled.
The People's Bank of China, the central bank, has urged Chinese banks to set individual accounting units to address cross-border capital transactions in the area. The transfer of yuan, the Chinese currency, from these accounts to the other country is limited to current account transactions, loan repayments and no financial investment.
Recognizing the success of the FTA of Shanghai, Zhu Xiaoming, chief executive of the International Business School China Europe, noted that both financial institutions and non-financial studied for their school are still unclear. Although the ease of cross-border capital flow has attracted interest in innovation, businesses in the area are still afraid to go beyond regulatory red lines.
Zhu called for regulators to address the issue of "information asymmetry" between policy makers and market participants in the area. One of his suggestions is to introduce an institution acting as a third party to design projects for companies facing.
Source: News agency “Xinhua” from China
traslation: Belén Zapata