An eleven square mile experiment in free trade economic policy has launched in Shanghai,
China with relaxed trade and banking regulation being inaugurated by Commerce Minister Gao Hucheng. Premier Li and President Xi Jinping have made their support in relaxing government controls on the economy in favor of more open trading and reduced regulation known. The two plan on presenting their case in November to the Communist Party at one of the parties regular plenums.
The free trade zone in Shanghai is being seen as a test by government officials to see how free trade can benefit the economy as a whole. “The market has considered the zone as Premier Li’s baby, and there will be big reforms,” said Chan Yan Chong, an adjunct professor of management at City University of Hong Kong. Despite this, Premier Li did not attend the inauguration which has some speculating that the central planners want to reduce expectations of exactly how big and how expansive potential market reforms may end up being.
Even still, the zone “is an important milestone in China’s efforts to build an international financial center and to reform and reinvigorate its economy for longer term economic viability,” said DBS Bank (China) Limited Chief Executive Officer Neil Ge. DBS Bank is among twenty five total companies that have been granted licenses to participate in the free trade zone. Other notable companies include Porsche and SAIC Motor Group. Specific reforms include easier cash flows with managed risk, quicker turn around times for acquiring business licenses, and laxer rules on Yuan convertibility.
This is a very exciting economic time in China and around the world. These reforms in the free trade zone are going to make China an even more attractive place to do business in. As always, BRIC Language Systems offers the most innovative Mandarin Chinese lessons online should you choose to take advantage of the excitement in Shanghai!