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China releases more details on Shanghai free trade zone reforms
December 2, 2013 / 10:57 AM / 4 years ago

China releases more details on Shanghai free trade zone reforms

SHANGHAI (Reuters) - Chinese regulators published new details on planned reforms for a free trade zone launched in Shanghai earlier this year, as Beijing moves to sustain enthusiasm in the face of resurgent investor skepticism.

A container truck drives past the container area at the Yangshan Deep Water Port, part of the newly announced Shanghai Free Trade Zone, south of Shanghai September 26, 2013. REUTERS/Carlos Barria

The list of reforms published by the People’s Bank of China (PBOC) on Monday was more detailed than previous lists but did not increase the proposed net scope of reforms in the zone, which already includes deep changes to the country’s exchange rate regime, cross-border investment flows and interest rates, alongside wide-ranging reforms to trade in goods and services.

The document said upcoming policy initiatives will include regulations allowing foreign companies with subsidiaries in the zone to issue yuan-denominated bonds; to allow foreigners to buy and sell Chinese equities and bonds directly without going through current pilot programs and to similarly enable Chinese individuals in the zone to buy overseas financial products without going through the current Qualified Domestic Institutional Investor (QDII) program.

The PBOC will create specially tagged bank accounts for use by companies and investors in the zone to conduct such activities, and that transactions between these special accounts and accounts in the rest of the country will be treated as cross-border flows.

However, the announcement did not specify any deadline for implementation.

Separately, the Ministry of Finance and the Ministry of Taxation also jointly announced new guidelines for how profits will be taxed within the zone.

All companies registered in the free trade zone will be required to pay corporate income tax.

Reporting by Pete Sweeney; Editing by Kim Coghill

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