Shanghai must make zone work

The Shanghai Free Trade Zone will foster China’s new competitiveness in the global market by removing institutional barriers standing in the way of China’s further integration into global trade, said an article in China Business News. Excerpts:

The zone should serve as a lab to develop a whole set of systems for cross-border investment and trade as well as effective administrative and supervisory models.

To fulfill these targets, the companies and financial agencies in the zone must abandon the old mindset of waiting for the central government’s preferential policies. The pilot zone is different from a traditional development zone in other parts of China.

The pilot zone should have the courage to draft and experiment with new systems with the freedom granted by the central authority and not be afraid of making mistakes.

The whole country is waiting for the zone to implement key financial reform areas, such as renminbi capital account convertibility, marketization of interest rates, cross-border renminbi settlement and liberalization of exchange rates.

Shanghai should take the risks to achieve these crucial breakthroughs and find the path for national restructure and upgrading.