FTZ to create favorable 'micro-environment' for investment

A blueprint for China's pilot free trade zone (FTZ) in Shanghai, which started operation on Sunday, indicates that Chinese policymakers attach great importance to investors' concerns and are looking forward to a favorable "micro-environment" for international investment and trade.

The Shanghai FTZ, located on the outskirts of the city where the Yangtze River empties into the East China Sea, launches a test bed for the Chinese leadership's drive for deepening market-oriented reforms and boosting economic vitality.

It is set to explore new ways of reducing government interventions and opening the Chinese economy wider to global investment.

According to the blueprint -- a detailed plan for the development of the FTZ published on the government's website, China aims to lift the zone up to international standards featuring convenient investment and trade, free exchange of currencies, efficient supervision and a sound legal environment after two to three years of test operation.

Within the framework of the blueprint, the Shanghai FTZ takes into account investors' concerns in the fields of institutional improvement, management and operation, and public services, said Xia Baowen, chairman of SM International Wholesale Center, the sole lease facilitator of the Port Klang Free Zone in Malaysia.

The blueprint is aimed at a solution to some practical matters facing investors, which is essential to the efficiency of the zone, he added.

An FTZ could attract investors only when it has advantages in tariff policy, logistics cost and clearance efficiency, which will be decided by its operator's capability in institutional innovation and management, Xia said.

Zhu Haibin, chief China economist at JP Morgan Chase & Co, also said the core of reforms in the Shanghai FTZ is a transformation of the government's administrative function.

"The free trade zone is a integrated concept, which includes the opening of finance, trade, investment and administration," Zhu said.