SHANGHAI May 16 China will set up an
international energy trading centre in its Shanghai pilot Free
Trade Zone (FTZ), which will host the country's first-ever
trading in crude oil futures, the China Securities Regulatory
Commission (CSRC) said on Friday.
The CSRC, which supervises the securities and commodities
futures markets, has also approved the Shanghai Stock Exchange
to set up a platform to trade "international financial assets"
in the FTZ as part of government policy to support the zone, a
spokesman for the regulator told a weekly news conference.
The regulator has also pushed Chinese brokerages and fund
asset management firms to set up branches in the zone, with
about a dozen of such subsidiaries having now been established
there, the spokesman said.
"The CSRC will in the future continue using the capital
markets to support the construction of the Shanghai FTZ," the
spokesman said, adding that market-oriented practices in the
zone would then be copied to other parts of the country.
The construction of the energy centre, with a paid-in
capital of 5 billion yuan ($8 billion), has so far made the most
progress, with preparations of its market and technical
mechanisms having been initially completed, the spokesman said.
The announcement is one of a series by FTZ officials in
Shanghai, who have been stung by public criticism -- including
from Chinese state media -- that they have been too cautious in
The so-called "negative list" of sectors and activities
banned for foreign investors in the FTZ was likely to shrink to
about 130 items this year from the current 190, Zhang Hong,
director of the fiscal and financial section of the FTZ
management commission, told a news conference on Tuesday.
However, details on which items would be removed from the
list were not disclosed. Investors have complained that the list
is still too long, and regulators continue to block investments
not explicitly prohibited by the list, including the
establishment of commodities warehouses by foreign commodities
Early announcements hyping the zone as the biggest reform
since the establishment of the special economic zone in Shenzhen
in the 1980s have since been criticised as over-selling it.
While the headlines promising deep financial reforms helped set
off a property bubble in the zone, economists questioned the
feasibility of enacting deep reforms to interest rates and
currency regimes without setting off a massive arbitrage spree.
Other national-level reforms enacted recently -- in
particular the creation of an investment channel between the
Hong Kong and Shanghai stock markets, and the development of a
nationwide cross-border cash "pooling" scheme to make it easier
for companies to get money out of the country -- have been seen
as making some of the reforms proposed for the FTZ moot.
FTZ officials have embarked on an apparent publicity blitz
to restore confidence in recent weeks, speaking at multiple
events and reaching out to the press.
At a conference held on May 8 by the Canadian Chamber of
Commerce in Shanghai, FTZ officials explained that the zone
would allow companies to base their headquarters in the zone but
carry out operations elsewhere.
"You can have your head in the zone but your arms outside,"
said Jian Danian, deputy director general of the FTZ
administration, adding that officials were planning to take
steps to keep rents under control to prevent high prices from
On the sidelines of the same event, Cao Yan Wen, deputy
director of the FTZ fiscal and financial services bureau, said
the FTZ's planned outbound stock investment scheme would be
wider in scope than the Shanghai-Hong Kong cross border stock
($1 = 6.23 yuan)
(Reporting by Lu Jianxin and Pete Sweeney; Editing by