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A reform being tested in the China (Shanghai) Pilot Free Trade Zone could be introduced toother areas when the time is right, according to Premier Li Keqiang.
He said the free trade account reform-that allows businesses to conduct easier cross-bordertransactions-could be expanded when conditions mature.
Li made the remarks on Wednesday during a fact-finding trip to Shanghai, in a move to push forbolder financial reforms in a risk-controlled environment.
He said the free trade account system, which has operated in the Shanghai zone for more than ayear, is an important measure to leverage both offshore and onshore markets. The trial could beintroduced to other places when conditions were right, he said.
The People's Bank of China, the central bank, launched the free trade account system for theShanghai zone in June last year.
It allows companies registered in the zone to use the account for financing, investment and othercross-border transactions. Firms in the zone can borrow offshore funds, transfer capital betweensubsidiaries in and outside of China and enjoy greater flexibility in managing foreign exchange.
To date, more than 39,000 such accounts have been opened in the Shanghai zone and cross-border transactions have reached 3.8 trillion yuan ($594.7 billion).
From January to September, the number of newly registered foreign-invested enterprises in theShanghai zone rose by 52.6 percent year-on-year, according to the Ministry of Commerce.
The number of such entities has more than tripled in the Guangdong, Tianjin and Fujian free tradezones.
"Economic statistics show that the FTZs are the trailblazers of China's reforms," Li said.
During his visit to the Shanghai head office of the People's Bank of China, Li listened to reportscovering ongoing reforms in the banking, securities and insurance sectors.
"Now that the ... risks have been prevented, we have to work in favor of stronger financialreforms. We have to work toward a two-way opening of the capital market," Li was quoted assaying by an official statement.
He also urged the municipal leadership to set up a market for insurance transactions to diversifyrisks.
In October, the central government allowed individuals in the Shanghai zone to directly buyoverseas assets-including businesses, stocks and real estate-instead of going through a thirdparty, such as banks and securities firms.
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