China on Friday unveiled the blueprint for the nations first free trade zone (FTZ) in Shanghai with a detailed list of reform tasks, easing restrictions on the yuan, investment and trade to spearhead the nation's future reforms, the official Xinhua News Agency reported.
The wide range of reforms will start as of Sunday when the zone is officially inaugurated. China aims to lift the zone up to international standards featuring convenient investment and trade, free exchange of currencies, efficient supervision and a sound legal environment after two to three years of tests, according to the detailed plan published on the government's website.
"Under the precondition that risk can be controlled, China will create conditions to test yuan convertibility under the capital account, market-set interest rates and cross-border use of the Chinese currency in the zone," the long-anticipated plan said.
Chinese banks in the FTZ will be permitted to conduct offshore business on the condition of effective oversight, which means they can provide services to depositors who are residents in other countries. The Shanghai FTZ will also allow eligible foreign-funded financial institutions to set up banks, and to team up with qualified private banks to establish joint-ventures.
The plan also pledged to establish a foreign exchange management mechanism adaptable to trade and investment reforms in the zone. Enterprises can try the free cross-border financing while multinationals are encouraged to establish regional or global capital management centers in the zone. Meanwhile, foreign companies will be permitted to conduct "a portion of specific types of telecommunications value-added business on condition of ensuring information security." Taxation policies that seek to boost investment and trade will be implemented in the zone, according to the plan.
Covering almost 29 square km, the zone will be modeled on existing free trade businesses in the country's economic hubs. "The zone will attract multinational corporations to set up offices there and help the country's industrial competitiveness," Xinhua quoted Wang Xinkui, director of Shanghai municipal government's counsellor office, as saying. Shanghai was home to 432 multinational corporations by the end of August this year, with another 277 foreign investment companies and 361 research and development centers.