Cool reaction to Shanghai Free Trade Zone as further details emerge

SHANGHAI - Following a partial set of details released last Friday, expectations had been running high that the new Shanghai Free Trade Zone would be launched as a breeding ground for investment and financial sector reforms. However, reaction so farh as been cool, especially given the absence of senior officials at the opening ceremony and the lack of details on financial sector reforms (which are now expected over the next one-to-three years), according to BBVA Bank.

BBVA says today’s release of a promised “negative-list” for foreign investment, while sound in principle for its effort to streamline approvals, may be a disappointment for those expecting big breakthroughs. “The list includes 190 areas that are off-limits to foreign investors, including 18 industries in manufacturing and services. Foreign investment in the FTZ is also not allowed in investment banks, finance companies, trust companies and money brokering companies.”

BBVA adds, however, that it is too early to assess prospects for the zone, which could eventually prove to be a testing ground and catalyst for broader reforms. www.bbvaresearch.com (ATI).