September 29, in the morning China’s government opened a free trade zone in the Pudong New Area,
a busiest Shanghai district. The pilot area that covers 29 square kilometers is commonly seen as an
important landmark on the country’s way to economic liberalization. In addition, the latest innovation
is likely to reverse the alarming slowdown in the world’s second-largest economy. Whether the project
will turn out to be productive will depend on determination of the national government.
The Waigaoqiao Free Trade Zone opening ceremony was attended by representatives of just two foreign
banks. U.S. Citigroup and Singapore-based DBS were the first to announce their participation in the
People’s Republic of China. Actually, exclusively Waigaoqiao residents can enjoy such a privilege; as
for foreign banks, they are only allowed to set up subsidiaries or joint-venture operations. By the way,
the reason is not about rigorous selection process at all. The thing is that overseas banks feel uneasy
about Waigaoqiao owing to unclear rules and regulations on specific aspects of foreign business. This
drawback was not even offset by that special smug air prevailing in the Shanghai economic area.
Be it as it may, the situation looks very likely to change soon. China took a groundbreaking approach
to the free trade zone regulations. The authorities are currently working on a „negative“ list of banned
investment targets and industries. Everything is going to be permitted, but for the enlisted points. It is
already clear that investors will feel much more freedom in Waigaoqiao than in the experimental free
trade zone implemented by Deng Xiaoping in the 1970-1980s in the southern city of Shenzhen. That
said, Shenzhen was still the driver of China’s unprecedented economic boom thanks to which one of the
poorest countries in Asia was able to transform into an economic giant.