China opens new free trade zone in Shanghai,starts new chapter in reforms

State-run Xinhua news agency quoted Commerce Minister Gao Hucheng as saying that the creating FTZ was a crucial decision made in the new era of Chinas reform and opening-up. It follows the tendency of global economic developments and reflects a more active strategy of opening-up, Gao said at the launch ceremony.

The State Council said on Friday it would open up its largely sheltered services sector to foreign competition in the zone and use it as a testbed for bold financial reforms,including a convertible yuan and liberalised interest rates.

Economists consider both areas key levers for restructuring the worlds second-largest economy and putting it on a more sustainable growth path.

Some Chinese and foreign firms have already moved to set up subsidiaries in the zone. A total of 25 companies so far have been approved to set up operations in a variety of sectors,alongside 11 financial institutions,most of which are domestic banks but including the mainland subsidiaries of Citibank and DBS.

Some have trumpeted the FTZ,which integrates three existing zones,as comparable to Deng Xiaopings creation of a similar zone in Shenzhen in 1978. Many credited that move as being crucial to Chinas economy opening up to foreign trade and investment.

Analysts and economists say that the plans for Shanghai,at least,are more specific and ambitious. For example,one major planned change officials described on Sunday will be in the regulations governing how foreign and Chinese individuals can invest across borders. Officials also said that China will develop an international oil futures trading platform in the zone and encourage foreign participation.