Looking to reverse the economic slowdown, the new Chinese leadership initiated further financial reforms by approving its biggest experimental project to establish a pilot free trade zone in China's biggest business hub, Shanghai.
The establishment of a pilot free trade zone in Shanghai, the first-of-its-kind on the Chinese mainland, has been formally approved by the central cabinet, paving the way for multi billion venture, fiercely pushed by economist Premier Li Keqiang to get implemented soon, according to a report in state-run daily 'Global Times' quoting a Chinese Ministry of Commerce statement.
Its success has far reaching implications for China as it is pushing similar China trade zones different countries, including Utter Pradesh in India, besides an economic corridor connecting China and Pakistan.
China always launched its new economic initiatives on experimental bases in select areas before expanding them to different areas.
Earlier reports said Li had pushed the project hard over ruling opposition to such a hub in the country's biggest city besides being its main financial hub.
Besides, there are apprehensions that it could pose a serious competition to Hong Kong, which virtually functions like a free trade zone with few restrictions.
The government argues that more reforms are needed to halt the slowdown of the economy which now hovers around 7.5 per cent in GDP terms with predictions that it may go down well seven this year.
Officials say the target of 7.5 per cent set by the government this year may be difficult to achieve in the face global and domestic economic slowdown.
The establishment of the 28.78-sq km area in Shanghai will consist of four separate zones under the special administration of customs, and paves the way for China's future economic development and will boost the country's global competitiveness, experts said.
"The establishment of the zone could facilitate the liberalisation of yuan capital accounts. In the future, for example, foreign entities may be able to issue bonds and be allowed to get yuan-denominated loans in the Shanghai zone," Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told Global Times.
"The main task of the Shanghai zone is to explore the new paths and models for China to open up, to push the pace of the transformation of government functions and reforms of the administrative system, to upgrade the means for economic development and to optimise economic structure," the statement said.
