SHANGHAI: A planned free-trade zone in Shanghai is raising hopes that China’s new leaders will revive long-stalled economic reforms as they seek to make their mark.
China has become the world’s second-largest economy and a driver of global growth, thanks to a boom unleashed three decades ago when the Communist Party loosened state control of business and began to embrace the market.
But deep reforms slowed over the past decade under the conservative President Hu Jintao, despite pleas from its trade partners, analysts said.
Some Chinese academics say the free-trade zone (FTZ) is on par with the special economic zones China set up in the 1980s and its commitment to join the World Trade Organization in 2001.
However, foreign businesses are waiting for details to see how far-reaching the changes—initially limited to the FTZ—might be.
“It’s a real try to put some of the reforms into place,” said Stefan Sack, vice president of the European Union Chamber of Commerce in China.
“We have been lobbying for some of these reforms for a long time. However, this is not going to change the structure of the country,” he added.
The FTZ scheme comes as hope for political reform dims and Beijing targets foreign firms across a range of industries for alleged overcharging.
But a draft plan seen by Agence France-Presse shows that it goes beyond trade liberalization to include investment and financial services, and covers 19 distinct sectors.
Chinese Premier Li Keqiang, who took office in March, has seized on the FTZ and made himself its top political patron, seeking to claim it as one of the achievements of his young administration.
“We will explore new ways to open China to the outside world, and Shanghai’s pilot free-trade zone is a case in point,” Li wrote in the Financial Times this week.
Although the idea for an FTZ was floated under previous premier Wen Jiabao, there was a belief it would be easier to accomplish after the once-in-a-decade power handover within the ruling party, officials say.
One reason was that with Shanghai’s Communist Party chief Yu Zhengsheng due for promotion, officials were waiting for the city’s new leaders to come in and oversee the project longer term.
Analysts said that China could be using the zone as a stepping stone toward an investment treaty with the United States and even a relationship with the proposed Trans-Pacific Partnership (TPP) trading bloc.