China hails free trade zone on one-year anniversary


China on Monday (Sep 29) hailed the first anniversary of its first free-trade zone (FTZ), but foreign companies expressed disappointment over the pace of pledged reforms as they await real business opportunities.

The FTZ was set up in China’s commercial hub Shanghai with the promise of a range of financial reforms, including full convertibility of the yuan currency and freer interest rates – both of which remain unfulfilled. But just two weeks ago authorities shook up the zone’s management, removing Communist Party chief and executive deputy director Dai Haibo without giving a reason, after media reports he was facing allegations of corruption.

In recent days, a flurry of activity has surrounded the zone. Earlier in September, China launched a gold market in the FTZ and Premier Li Keqiang gave his stamp of approval during a visit. And on Monday Microsoft launched its Xbox One in China – made possible by a new policy for the FTZ.

“The results of the reforms in the pilot FTZ in the first year are better than expected,” Shanghai’s Communist Party chief Han Zheng told state media in a lengthy interview carried by major newspapers Monday. “It’s a major step to further promote reform and opening-up under the new scenario.”

On Sunday, China’s cabinet approved further opening to 27 sectors, plans for which had been announced by Shanghai in July. The policies include allowing foreign investors to set up wholly owned companies to design yachts and manufacture aviation engine components. They would also be allowed to process green tea through joint ventures with Chinese partners.


Foreign company executives say privately they are disappointed, while publicly many say they are still waiting to see what opportunities might arise. “It’s (the FTZ) part of the ecosystem to encourage new things, out-of-box thinking, which nowhere else has. So we’re still watching,” said Frank Jiang, head of R&D in Asia-Pacific for French pharmaceutical giant Sanofi.

About 12,266 companies had registered in the zone by mid-September but only 13.7 per cent, or 1,677, were overseas firms, according to official figures.

Chinese investors still cheered the one-year anniversary on Monday, chasing stocks of companies related to the zone. Shanghai Waigaoqiao Free Trade Zone Development rose 1.39 per cent while import and export firm Shanghai Material Trading gained 3.14 per cent.

The launch of an international board for gold trading was the first major reform aimed at establishing more open financial markets in the FTZ by allowing more foreign investors. “The establishment of the international board is creating an offshore market in China with which they can pilot a lot of measures to internationalise the financial markets,” said Albert Cheng, Far East managing director for industry group the World Gold Council.

Chinese officials have made clear that eagerly anticipated financial reforms will be incremental while risk management remains a priority. “The opening of the capital markets and renminbi (yuan) ‘going out’ will depend on the completion of the supervision system and strengthening risk prevention measures,” said Zheng Yang, head of Shanghai’s financial services office.

The government keeps a tight grip on the yuan, also known as the renminbi, fearing unpredictable inflows or outflows of funds could harm the economy and reduce its control over it. “We will continuously move forward with renminbi internationalisation, interest rate liberalisation, financial market opening and capital account convertibility,” Zheng said.






Source : Channel News Asia | September 29, 2014

Thomas D’Innocenzi


About thomasdinnocenzi

Thomas D’Innocenzi is a highly accomplished, results-focused international consultant with extensive experience in global sourcing and business development worldwide to meet evolving business needs. Tom has proven ability in implementing and managing profitable global marketing and sourcing operations. He has extensive experience in international business development to accommodate rapid growth. Skilled in building top-performing teams, bench-marking performance, and developing organizations to improve efficiency, productivity, and profitability. Experienced transition leader and change agent. Tom founded Nova Advisors with the mission of providing expert Global Business Development consulting services for companies seeking to expand their market share as an independent consultant. Tom has a network of experts and advisors throughout the Asia-Pacific region and North America. His expertise includes business development, global sourcing, manufacturing, commodities, logistics, QA/QC, FDA, regulatory compliance, sustainability, and supply chain optimization. Tom is experienced in the medical device, apparel, consumer goods and technology services verticals helping companies advance their global sourcing capabilities and develop new markets through a local and sustained approach. Located in SE Asia and the United States, Tom expands market reach to drive sales. His global sourcing strategy includes directly negotiating with commodity suppliers, supply chain networks and distributors for optimal terms based on his expertise and first-hand knowledge of the players. Contact Tom to use his consulting service to increase your global market and make global sourcing profitable for you in the Asia Pacific Region and the United States. USA Direct: +1.904.479.3600 SINGAPORE: +65.6818.6396 THAILAND: +662.207.9269
This entry was posted in Business, Economy, Global Sourcing and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s