Opinion: Don't be too negative about the FTZ

The launch and the publicity surrounding The China (Shanghai) Free Trade Pilot Zone (FTZ) gave rise to much excitement and expectations of reform in key areas such as foreign exchange control and the regulation of foreign investment. However, the initial euphoria has been largely replaced by a sense of cautious scepticism. Is it fair already, as many people have done, to write off the zone as a publicity stunt?

The General Plan for the Shanghai Free Trade Zone that was released alongside six sets of administrative measures at the zone's inauguration promised a series of reforms, including the introduction of a negative list concept. The list sets out those types of projects that are still subject to foreign investment pre-approval and those projects still subject to percentage caps on foreign investment. The issuance of the negative list was the first blow to expectations, as, with some minor exceptions, it merely set out those areas which were subject to restrictions in the existing and long-standing Foreign Investment Guidelines. Sceptics took this as a sign that the Shanghai government could not deliver because of central government opposition.

A first step