The new Shanghai Free Trade Zone will have more than just games consoles, SCMP reports that the government will allow unrestrained exchange of yuan renminbi within the zone.
A draft plan showed the Free Trade Zone in Shanghai is intended to make the city into a true international trade and financial centre by going beyond the liberalisation of trade, including the free convertibility of currency.
The plan was first announced by the government in July and it was endorsed by premier Li Keqiang who said he wants to use the trade zone to show how China can upgrade its economic structure.
“On the condition risks can be controlled, [firms] can undertake convertibility of the yuan on the capital account on a first-to-do and first-to-try basis within the zone,” the draft plan said.
The yuan is already convertible for trade but Beijing still imposes restrictions on its convertibility on the capital account, mainly because of concerns that excessive money inflows and outflows could threaten the growth of the economy.
The document did not say whether the government would allow full convertibility of the yuan on the capital account. It remained cautious about the potential risks of greater convertibility, even within the zone.
The free trade zone currently covers a 29 square kilometre area in Pudong, including the Waigaoqiao duty-free zone and Yangshan port, but may eventually be expanded to cover the entire Pudong district if it proves successful.
[By Sam Canpadee]