SHANGHAI, Sept 11 (Reuters) - A draft policy outlining financial and industrial reforms in Shanghai’s recently approved Free Trade Zone (FTZ) could be released as early as this week, the official Shanghai Securities News reported, citing sources with knowledge of the matter.
Once the policy document is released, Shanghai will present its interim management plan for the zone, which is expected to launch on Sept. 27, the paper said on Wednesday.
The State Council has said the zone would test yuan convertibility and further liberalisation of interest rates, alongside reforms of foreign direct investment and taxation.
Unconfirmed media reports have outlined initiatives targeting shipping, insurance, healthcare and “cultural relics” auctions, among others.
The FTZ will also be used to test bureaucratic reforms such as reducing paperwork and other processes that companies have blamed for slowing investment and inhibiting trade.
Sources at a major state-owned bank told Reuters they expected the zone to feature initiatives related to the development of China’s enormous commodity trading industry and related trade financing, as well as making it easier for companies to raise funds from foreign banks in the FTZ.
Citigroup Inc and HSBC have said they are seeking roles in the Shanghai FTZ.
Last week, the official China Daily reported Guangdong province, an export powerhouse in southern China across from Hong Kong, was studying how to develop a free trade zone in cooperation with Hong Kong and Macau.
The province has an FTZ in Qianhai which is testing features of capital account opening, including allowing Hong Kong banks to issue yuan-denominated loans to companies in the zone.
Economists are unsure of the extent of financial reforms Beijing will permit in the zones, with many concerned that differing interest rate and currency regimes could provoke a wave of arbitrage.
Investors have also expressed concerns that competition between regions and bureaucracies in charge of different aspects of financial and industrial policy could confuse companies and slow uptake. (Reporting by Pete Sweeney; Editing by John Mair)