The launch of  Shanghai free-trade zone is major step for financial reforms and economic experimentation. It has been seen as the most important attempt after Deng Xiaopin designated Shenzhen on the border with Hong Kong a special economic zone in 1980. The zone is expected to be s a testing area for such financial experiments before they are introduced elsewhere in China.

The detailed outline of how the zone will operate will be published until later this year. But the main features of the zone has been reported. The restriction for foreign investment will be eased, including shipping, law and engineering. Foreign-owned performing arts agencies and medical institutions will be allowed. The control of interest rate will be loosened, and more by the market forces, thus to encourage the investment. And heavily-regulated currency, the yuan, will be swapped freely for other currencies.

By opening the new test zone in Shanghai, a city of 20 million and one of the country’s major financial centers, Chinese government is planing to open up its financial system and internationalize its currency. Intense foreign investment will flow into free-trade zone next few years without restricted control, and therefore potential profits will be huge to obtain.  And this experiment transformation shows that China is moving to conform to new trends in the global economy and trade.

BBC NEWS VIDEO: http://www.bbc.co.uk/news/business-24326880

References:

http://www.theguardian.com/world/2013/sep/29/china-shanghai-free-trade-zone