Shanghai, China (4E) – China officially launched a free trade area in Shanghai on Sunday, according to state-media reports, with the new zone will likely become a trial ground for economic reforms that the world’s second biggest economy badly needs.
The project, which was first disclosed in July, has the support of the State Council and is seen as a testing ground for banks and other businesses trying to experiment in areas that are tightly controlled by the government. Among the changes expected are loosening of interest rate regulations and the renminbi’s full convertibility.
Chinese Commerce Minister Gao Hucheng was in attendance during the opening ceremony for the 29-sq. km zone. The free-trade zone would help the country’s aggressive opening-up strategy, according to Mr. Gao.
Among the 18 sectors that are expected to have their regulations loosened would include finance and shipping.
Interest over the launch has lifted shares of Shanghai-listed firms and drive an appreciation in home and land prices in areas located near the zone in the last few weeks, according to reports of the state-run media.
The free-trade zone’s creation comes at a time when China’s new leaders are faced with the task of restructuring a rapidly-growing economy that restricts flow of capital and foreign investment as well as provides preference to state-run enterprises.