Shanghai's exciting initiatives offer great opportunity
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We recently took a business group from Asean to visit Shanghai to learn about the Shanghai Free Trade Zone (FTZ) and Hong Qiao Economic and Technological Development Zone. We see these as important developments that present a great opportunity for local c
The FTZ is in an area covering just under 30 square kilometres in the Pudong side of Shanghai, while the Hong Qiao district is a commercial district to the west of the city. The FTZ offers a number of privileges to companies, such as less governmental red tape, facilitation of cross border trade and fewer foreign-exchange controls.
The Hong Qiao district is being developed as an integrated transport hub linking the international airport with high-speed rail and local transport networks.
The two districts are part of a comprehensive development plan for Shanghai, and will help position the city as a global leader in manufacturing, trading, and finance – a strong rival to Hong Kong and, perhaps in the future, to even New York and London.
The FTZ will be the first free-trade zone in mainland China and will provide a testing ground for social and economic reform.
While there has been some disappointment that it has been slow to get off the ground in areas such as liberalising the financial markets I believe the delays simply reflect the government’s cautious approach.
It wants to open up the markets at a controlled pace to prevent excessive volatility and instability.
Certainly the reforms will be implemented, as they are a prerequisite for the yuan to become a fully convertible currency.
An important milestone in this process last month was the introduction of the Hong Kong-Shanghai stock exchange link on November 16, which allows cross-border transactions of up to $3.8 billion per day. Since it began there have been massive flows of offshore yuan into Shanghai equities and the Shanghai Composite Index has surged to three-month highs, outperforming all other major equity markets.
The link is the latest in a series of steady and incremental steps towards market liberalisation and supports the development of Shanghai as a leading global business and financial centre.
A number of Thai companies, including Bangkok Bank’s subsidiary Bangkok Bank (China), have already become established in the Shanghai FTZ, which I am certain will bring them major benefits in the future.
