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China moves towards convertibility of the yuan with free trade zone

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September 8
1:48 PM 2013

In an expected move, China had issued a directive to allow free exchange of the yuan currency within the borers of its first free trade zone. The plan was seen by AFP last Thursday and it showed a clear bold push towards reforming the world's second biggest economy.

The Shanghai Free Trade Zone seeks to make the city become a 'true international trade and financial center'. The zone is expected to challenge the Hong Kong economic freedom, which currently is a special administrative region in China, according to analysts and other officials.

China's new president, Premier Li Keqiang is said to be supporting the zone, which the cabinet approved just last month. It is viewed as one of crowning achievements of his administration, which was installed just last March.

The draft plan also showed the free trade zone would help China achieve greater liberalization of trade in investment and financial services. One of these services include free convertability of the Chinese yuan. This is one of the major obstacles that prevent Shanghai from freely competing ith established financial capitals such as Hong Kong, London and New York.

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