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China launches "free trade zone" in Shanghai

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Nicky
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http://www.foxnews.com/world/2013/09/29/china-launches-free-trade-zone-in-shanghai/?intcmp=obinsite

 

I wish they'd call it something else, because it's not a free trade zone, but the measures are positive, and China's new PM seems to be aiming to eventually expand them across the whole of the economy, to address the slowing of GDP growth (to a 13 year record low +7.7%).

 

I'm curious what some of the members more familiar with the Chinese economy think about this.

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I wish they'd call it something else, because it's not a free trade zone, but the measures are positive, and China's new PM seems to be aiming to eventually expand them across the whole of the economy, to address the slowing of GDP growth (to a 13 year record low +7.7%).

The only criticism I've heard is that China has had such zones for many decades (started with a boom town just across the Hongkong border), and it is time to make such things more universal. If that's the best criticism, the zone is probably a good thing, because it is probably what's politically feasible right now. As I understand it, the idea is to experiment with allowing some things that one cannot do in China today: the biggest seems to be some more freedom on capital flows, but they're also suggesting they will allow more social media access.

The devil will be in the details, but I think the big picture is that top Chinese leaders understand they have to change in the right direction, but also understand that there is political resistance -- from those who benefit from the status quo. They cannot rock the boat too much, but one has to give them credit for making moves in the right direction. [Analogously, there are U.S. politicians who see issues with entitlements and want to take baby steps away from it; but these people aren't running things, nor are they getting traction.] The alternative would be a Chinese government that more actively denied it had anything to worry about, because tomorrow never comes.

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