Operations formally kicked off on Sunday at a new free-trade zone in Shanghai that China’s government has billed as a major step for financial reforms and economic experimentation, but significant changes look to be years away.
State media reported that a first batch of 25 Chinese and foreign companies were granted licences to register in the zone. The China (Shanghai) Pilot Free Trade Zone is a nearly 29-square-kilometer (11-square-mile) district that covers four existing special trade zones in Pudong district, including one at the airport.
China’s State Council formally announced rules for the new free-trade zone on Friday. They outline goals to upgrade financial services, promote trade and improve governance as well as measures to encourage foreign investment in 18 sectors in the country’s tightly regulated service industry.
There are also plans to experiment with the convertibility of China’s tightly controlled currency, the yuan, and let market forces rather than regulators set interest rates.
The zone is expected to serve as a laboratory for such financial experiments before they are rolled out elsewhere in China. No timeline was given for any changes, but rules in the zone will be introduced over a three-year period, according to the announcement.
At a ceremony marking its opening, commerce minister Gao Hucheng said the government hoped the zone would act as “an experimental field to conduct economic reform” and promote economic development nationwide.