An Opportunity for Foreign Investment

The first free trade zone in China is now open in the city of Shanghai. An area of some 30 square kilometers will see all restrictions on direct foreign investment lifted for the next three years in an effort to attract capital from abroad. A total of 18 sectors are open, from shipbuilding to culture, but first on the list is finance.

According to local media, government intervention in the market will be reduced to the minimum, the only rule – no negative investment. Controls will also be more relaxed for businesses as a part of a long term plan to allow China’s renminbi currency convertibility in and access to global financial markets. Restrictions on bank interest rates will also be removed so Chinese and foreign banks can provide a larger range of services.

The intention is to develop a climate that favours innovation for developments in healthcare, logistics, insurance, and the other areas that are currently under the government’s control. There may be more free trade zones set up in the future following on the heels of the Shanghai success story.