Chinese banks in the Shanghai Free Trade Zone (FTZ) have been allowed to conduct offshore business, a move further liberalising financial markets as part of new reforms initiated by the world’s second-largest economy to halt its slowdown. Chinese banks in the FTZ, which is being set up on an experimental basis, will be permitted to provide services to depositors who are residents in other countries.
Shanghai FTZ will also allow eligible foreign financial institutions to set up banks, and team up with qualified domestic banks in joint ventures.
Some domestic banks, such as Bank of Shanghai, China Construction Bank, the Industrial and Commercial Bank of China and Shanghai Pudong Development Bank, announced that they were approved to set up branch banks in the FTZ, state-run Xinhua news agency reported on Saturday.
Shanghai Pudong Development Bank sees the FTZ as a great opportunity to provide clients with services based on its offshore and onshore financial platforms.
The bank has been researching capital account convertibility and Renminbi cross-border use, and will issue a comprehensive plan on financial services once FTZ policies are fully in place. Trade and openness in the FTZ service sector need to be supported by major financial reforms such as full convertibility of the yuan and freer capital flows, said Lian Ping, chief economist at the Bank of Communications.