China opens new Shanghai free trade zone

China opened a new free trade zone in Shanghai yesterday in what is potentially its boldest reform move in decades.

It also gave more details about its plans to liberalise regulations governing finance, investment and trade in the zone.

The Shanghai zone, which covers about 29km² of the eastern outskirts of the commercial hub, was approved by China's State Council in July.

The state-run Xinhua news agency quoted Commerce Minister Gao Hucheng as saying that the zone was crucial for China's next wave of reform and of opening up to the world.

"It follows the tendency of global economic developments and reflects a more active strategy of opening up," Gao said.

The council said on Friday that it would open its largely sheltered services sector to foreign competition in the zone and use it as a test bed for financial reforms, including a convertible yuan and liberalised interest rates.

Economists consider both reforms to be essential for restructuring the world's second-biggest economy and putting it on a more sustainable growth path.