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Shanghai FTZ pilots reforms for national use(2)

2014-09-28 17:45 Xinhua Web Editor: Mo Hong'e
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Ten Chinese banks have connected to the system and opened 4,110 free trade accounts for clients. HSBC and Citi bank are also preparing to be incorporated into the system, said Zheng Yang, director of the Shanghai Financial Services Office, during a briefing about the FTZ on Friday.

"The financial reforms already implemented in the Shanghai FTZ have provided a snapshot of what an offshore financial center looks like on the Chinese mainland: funds can flow freely between the zone and offshore but are subject to curbs when flowing through the rest of the country," said Lin Caiyi, chief economist with the Shanghai-based Guotai Junan Securities.

However, the pace of financial reforms in the FTZ has not lived up to the expectations of many. While the flow of goods has been greatly eased by a more flexible customs clearance system and the lifting of several bans, the flow of capital still faces restrictions.

Zheng indicated on Friday that more measures to enable the free flow of capital, both in the Chinese yuan and other currencies, are in the pipeline.

"We have been monitoring fund flow through these free trade accounts, and they haven't become a channel for hot money or arbitrage," Zheng said, adding that the FTZ will conduct a stress test for further opening of the capital account in the zone.

BROADER ACCESS FOR FOREIGN FIRMS

The FTZ has also made progress in opening more areas in the country's service sector to foreign companies. The State Council, China's cabinet, lifted a 13-year ban on sales of gaming consoles in the FTZ, paving the way for Microsoft to launch its Xbox on the Chinese mainland on the FTZ's one-year anniversary on Monday. Sony is also mulling a joint venture inside the Shanghai FTZ to manufacture and sell its PlayStation in China.

Meanwhile, the FTZ will also host the Chinese mainland's first wholly foreign-funded hospital, as German healthcare group Artemed has inked a deal to build a hospital in the zone, though details have yet to be disclosed.

"Getting people to open business here is not the ultimate purpose of the Shanghai FTZ. It is all about experimenting new policies that have the potential to be replicated elsewhere in the country," KPMG's Lu said.

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