China is scheduled to launch a new free trade zone in Shanghai over
the weekend, a move that some analysts think could be a game changer for
the world's second-biggest economy.Investors have reacted with great enthusiasm, snapping up huge amounts of real estate in the area and driving up the share price of any company with "Shanghai" in its name.But there's just one problem -- the government hasn't said much about how it plans to run the program.
"There are no real details," said Shaun Rein, managing director of
China Market Research Group. "Everybody wants to know what it is. But
it's just a lot of rumors."
In broad strokes, the 29 square
kilometers free trade zone, approved in August by China's State Council,
is expected to make it easier to do business in a small part of China.
Trade policies are likely to be more tax-friendly, and foreign
investment bans could be removed in sectors such as health care and
insurance. Beijing could also tackle financial reforms by lifting
restrictions on bank interest rates, supporting greater convertibility of the yuan and encouraging a broader range of financial services.
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