Ralph Haupter, corporate vice president of Microsoft, talks with reporters during a press conference after the inauguration of the China (Shanghai) Pilot Free Trade Zone during a ceremony in Pudong district of Shanghai on Sunday. Photo: AFP

The widely anticipated China (Shanghai) Pilot Free Trade Zone (FTZ) started operations Sunday morning with a short inauguration ceremony held to unveil the administrative committee of the FTZ.

The commencement of the FTZ represents the latest attempt by the Chinese government to test new policies of reducing government intervention in the economy and further open up to global investment, after several months of intense preparation.

The inauguration of the FTZ, described as China's most significant economic reform drive since the establishment of the Shenzhen Special Economic Zone over three decades ago, was hailed by domestic and global observers as a bold step taken by China's new leadership in realizing their vision of economic transition.

According to the blueprint released, major financial reform measures like yuan convertibility under the capital account, market-set interest rates and cross-border use of the Chinese currency will be tested in the zone, Xinhua reported.

Inside the FTZ service center, almost half of the 36 service windows are already open for inquiries, though it will not be until October 8 that the center starts to register companies.

Sheng Jianqiang, owner of a financial leasing company, inquired about how to set up a company in the free trade zone.

"The details aren't out yet, but they told me it only takes four working days to finish the paperwork, while it usually takes one month to finish all the red tape. I hope the free trade zone will have favorable tax policies toward financial leasing companies," he said.

The FTZ is seen as a boost for reforms of the financial sector. During Sunday's inauguration ceremony, 25 enterprises and 11 financial institutions, including eight Chinese banks and two foreign banks, were licensed to establish branch offices in the FTZ.

Among the first batch of approved operations, 11 were foreign invested or joint ventures.

Also on Sunday, China Banking Regulatory Commission issued a notification on its official website supporting, for the first time, privately owned capital to establish financial institutes like banks and financial leasing companies in the FTZ. Participation by private capital in joint venture banks was also encouraged.

The FTZ is hoped to make Shanghai emerge as a future financial leader in Asia, which will increase China's economic influence in the long run.

For non-financial sectors, expectations were also high.

Almaco, a Finnish company that builds accommodation and food areas on luxurious passenger ships, is among the first batch of 25 Chinese and foreign companies that have been granted licenses to register in the free trade zone.

A representative at the company's Shanghai office surnamed Tang told the Global Times, "Currently we haven't seen detailed policies, but we are confident that the free trade zone will issue favorable policies to the marine industry, which is why we wanted to capture this opportunity."

Experts say the FTZ is also a starting point for China to get involved in the process of writing global trade rules, especially when several new free trade arrangements such as the Trans-Pacific Partnership (TPP), seemed to be bypassing the world's second largest economy.

Agencies contributed to this story

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