New FTZ seen as a major step for deeper reform

Source: caixin.com

The establishment of the Shanghai Free Trade Zone (FTZ) on July 3 is generally believed to be a test platform for foreign-related reforms aimed at helping China catch up with global trends in areas like trade, investment and financial services, which a State Council release said would be crucial to achieving an "upgraded Chinese economy."

Shanghai's pilot FTZ will not only boost the city's influence as an international financial center, but also help the country's exporters adapt to the global market, Pan Zhengyan, deputy director of the Financial Research Center of the Shanghai Academy of Social Sciences, was quoted by business news portal caixin.com as saying.

"Currently, many countries are actively engaged in talks on regional trade agreements, such as the US-led Trans-Pacific Partnership (TPP). And in order to catch up with developing trade trends and keep risks under control, the central government needs to first experiment with the Shanghai FTZ," He Weiwen, co-director of the China-US-EU Study Center under the China Association of International Trade, told the Global Times.

Yet, the Shanghai FTZ means much more than just a zone for duty-free trading, according to Bala Ramasamy, a professor of economics at China Europe International Business School.

"The function of the FTZ in Shanghai would be better described as a deeper reform zone," he told the Global Times. "The idea is to test out deeper reforms in a particular area just like how the initial reform and opening-up started in the 1980s."