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IMF vice chief: FTZ must be expanded nationwide

China.org.cn, October 14, 2013

• IMF Vice Chief Zhu Min said that establishing the Shanghai FTZ shows that the Chinese government is gradually opening up the economy, but favorable policies in the zone should be expanded throughout the country.

  Favorable policies to be implemented in the recently established Shanghai Free Trade Zone (FTZ) ought to be spread throughout the country, according to Zhu Min, a Chinese economist and deputy managing director of the International Monetary Fund (IMF).

  The former deputy governor of the Bank of China and People's Bank of China argued that such policies should benefit the entire country rather than "forever staying in a glasshouse."

  Zhu said that pioneering new policies is one of the roles of the Shanghai FTZ, which embodies the central authorities' strategic thinking. He added that the Shanghai FTZ is a test site for further opening-up measures, and that China's relatively weak financial infrastructure has forced the central government to act slowly and cautiously.

  In August, the State Council approved the China (Shanghai) Pilot Free-Trade Zone, causing speculation. Some argued that the Shanghai FTZ would aid the internationalization of the renminbi, in the same way that the Hong Kong market has encouraged the offshore trading of the yuan.

  According to Zhu, guarding against external influence on the Chinese financial market is a pressing issue.

  Zhu said that his team once conducted a stress test to see how much external influence would affect China's economy – and the result was astonishing. "Before 2007, on the eve of the global financial crisis, external factors could only affect China's GDP growth by around 30 percent," he said. "The figure increased to 70 percent in the post-crisis era."

  "This shows that that preventing risk is vital to a big economy such a big economy as China," said Zhu.

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