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China’s cabinet urges Shanghai’s Hong Kong-style Lingang free-trade zone to deepen reforms
- A guide issued by the State Council highlights the ‘strategic role’ of the FTZ and encourages it to ‘spearhead some trial programmes’
- Reform measures designed for a high degree of openness are required, Shanghai-based researcher says
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Daniel Renin Shanghai
The State Council, China’s cabinet, has urged Shanghai to further simplify customs procedures and liberalise financial markets to spur cross-border cargo and capital flows in the 240 square kilometre Lingang free-trade zone (FTZ), a week after President Xi Jinping’s visit to the city.
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According to an operating guide on the development of the FTZ, cross-border trading of asset-backed securities and use of the digital yuan will be conducted on a trial basis in Lingang, mainland China’s first economic testing ground of its kind. The council, which published the guide on Thursday, also underscored the importance of risk controls to ensure financial stability and cybersecurity.
“The guide is compiled to highlight the strategic role of the FTZ and encourage the zone in Shanghai to spearhead some trial programmes,” the cabinet said in the guide, which was distributed to the relevant authorities, according to the Xinhua state news agency.
“The Shanghai FTZ will be developed into a demonstration area to promote the nation’s economic reforms.”
Beijing allowed Shanghai, dubbed the “dragon head” of China’s economy, to create the FTZ in 2013, envisioning a Hong Kong-style territory where free cross-border capital and commodity flows would be allowed.
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Technically, the yuan would be fully convertible inside the zone, where foreign investors could also set up businesses such as telecoms and entertainment services providers without investment restrictions.
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