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Business / Macro

Shanghai plans pilot free trade zone

(Xinhua) Updated: 2013-01-27 21:15

SHANGHAI - Shanghai official on Sunday announced plans to set up a pilot free trade zone (FTZ) that would meet international norms in its Pudong New Area, the city's financial and commercial hub, in 2013.

According to the International Convention on the Simplification and Harmonization of Customs Procedure, FTZ refers to an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of customs authorities.

Shanghai has applied for a permit to build the FTZ on the basis of its existing comprehensive bonded zones.

If the application is approved, the FTZ would become the first free trade zone in the Chinese mainland, said sources with the government of Pudong New Area.

Building the FTZ is one of the Shanghai municipal government's major tasks in 2013, according to a report on government work delivered by Yang Xiong, acting mayor of Shanghai, at the first session of the 14th municipal People's Congress.

It will take about three years to build up an FTZ up to international standards, said Wan Zengwei, director of the Pudong Academy of Reform and Development in Shanghai.

Analysts said Shanghai has advantageous conditions for setting up an FTZ on the basis of the existing comprehensive bonded zones -- Waigaoqiao Free Trade Zone, Yangshan Free Trade Port Area, and Pudong Airport Comprehensive Free Trade Zone.

The trade volume of Shanghai's comprehensive bonded zones in 2012 totaled over $100 billion, the highest in the Chinese mainland.

China sees establishing FTZs as opportunities to boost its trade with surrounding economies and contribute to world trade volume, said Zhou Hanmin, vice-chairman of the Shanghai Municipal Committee of the Chinese People's Political Consultative Conference.

The FTZ will help Shanghai to cut the costs of trade and improve the trade efficiency, Wan said.

Besides, the FTZ will demand some supporting financial services such as cross-border financing businesses and international trade settlement, which will be conducive to deepening China's financial reform, the official added.

Analysts believe that the FTZ to be built in Shanghai will serve as an important engine for China's cause of deepening reform and opening up in the next five to 10 years.

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