The Financial Opening Up Of Shanghai Pilot Free Trade Zone(FTZ) And The Upgrading Of China’s Financial Opening Up

In macro perspective, Shanghai Pilot Free Trade Zone(FTZ) is set up to copewith the latest development of global economy and trade. As for China’sdomestic market, in order to promote China’s reform and opening-up, thecentral government set up the Shanghai FTZ on September29,2013, aiming toquicken the process of financial opening up.As for the international market, the sharp transformation of world’s economyhas impelled China’s financial reform and accelerated the rise of Shanghai FTZ.Particularly, currently the United States is pushing forward the Trans-PacificPartnership Agreement in Asia-Pacific region and Trans-Atlantic Trade andInvestment Partnership (TTIP) in Europe. The world’s economic rules,standards and pattern will be transformed largely if these two are reached.Under these circumstances, the Shanghai FTZ is set up to provide China withstrong support in new economic and trade rules-making process: the FTZ willintroduce a series of trials of new rules and standards of international economyand trade; the FTZ will make references for negotiations between China and theU.S. and other developed countries through bilateral, multilateral and regionalcooperation under the new situation.Moreover, the financial opening up was highlighted by China’s centralgovernment in many ways: in the “A Decision on Several Major IssuesConcerning Comprehensively Deepening Reforms by the Central Committee of theCommunist Party of China”, the capital account convertibility process is urged to“speed up”, rather than “to realize in phase” as its previous official indication; inthe “The Overall Programme for Shanghai Pilot FTZ” released by the StateCouncil, which listed five major objects for Shanghai FTZ(expeditingtransformation of government functions, expanding openness of the investmentfield, advancing transformation of the trade development pattern, deepeningfinancial opening up and innovation and improving institutional guarantee inlegal field), the financial opening up was prioritized. In addition, the People’s Bank of China issued “Commenting on Supporting theFoundation of Shanghai Pilot FTZ with Finance”, which unveiled the road-mapof financial opening up in Shanghai FTZ from four sectors: to propel the processof capital account convertibility, to expand the cross-border transactions of RMB,to push forward the liberalization of interest rate, and to deepen the reform offoreign exchange management. This so-called “Four-in-One” route will lead theway of financial opening up in Shanghai FTZ, particularly through the openingof capital account and the internationalization of RMB.Overall, four chapters are included in this paper: the first chapter will introducethe research object and background, literature review in details; the second partwill elucidate the strategic mission of further financial opening up from historicalevolution and current situation of China’s financial openness; the third piece willdiscuss the status and significance of Shanghai FTZ as the pilot zone of China’sfinancial opening up; and the last chapter will focus on two major enlightenmentout of the Shanghai pilot FTZ, aiming to popularize and upgrade China’sfinancial opening up in the future. Based on previous research findings, thispaper studies about the Shanghai FTZ as China’s trial plot of financial openingup intensively, mainly supported by discussing the capital account openness andthe RMB internationalization in this area. This paper is expected to providepractical reference on China’s nationwide financial openness in the future.