China to expand limited FTZ reforms nationwide

[SHANGHAI] China will expand some reforms from its first free trade zone in Shanghai nationwide, it said on Thursday, even as foreign firms show disappointment over the slow pace of change in the FTZ.

The Chinese commercial hub set up the FTZ in September 2013, with the promise of a range of financial reforms, including full convertibility of the yuan currency and free interest rates - which remain unfulfilled.

The State Council, or cabinet, announced that 22 measures from the FTZ will be "replicated" across the country by the end of June, according to a statement on the central government website.

They include allowing the production of game consoles nationwide, as well as setting up foreign-invested credit evaluation firms and the use of paperless customs clearance, the document showed.

The announcement comes ahead of China's annual legislative session in early March, when leaders are expected to proclaim their support for economic reforms.

A foreign business group last week urged the Shanghai government to speed up the pace of development in the FTZ.

"Progress made in the first year is welcome but the measures taken were very much low hanging fruits," the Shanghai chapter of the European Union Chamber of Commerce said in a position paper.

"There has been no significant progress in service sector liberalisation or interest rate liberalisation, areas that are crucial for rebalancing China's economy."

Shanghai Mayor Yang Xiong on Thursday pledged greater efforts towards financial liberalisation but made clear it would depend on the central government.

"We will continue to carry out the arrangements of the central government... in particular, capital market construction and opening of the capital account," he told a news conference.

China keeps a tight grip on its capital account, fearing unpredictable inflows or outflows of funds could harm the economy and reduce its control over it.

The Chinese government in December announced plans to allow three new FTZs based on the Shanghai model in the provinces of Guangdong and Fujian, as well as Tianjin city.

Shanghai itself plans to expand its FTZ to more than 120 square kilometres from the current 28.78 square kilometres, the city government said late last year.

AFP