Shanghai FTZ Launched
China has officially launched the Shanghai Free Trade Zone. The State Council on Friday unveiled the list of deregulated sectors in the zone that will open up to foreign investors and where the Renminbi will be fully convertible in 3 years. The sectors include six major areas: financial services, shipping and logistics, trade, professional services (eg law and engineering), entertainment, and social services (eg education and healthcare). The blueprint has just outlines with details yet to be announced by the end of this year.
Local Government Debts 'Up to 20 Trillion Yuan'
The size of local government debts in China has amounted to 20 trillion yuan, and it is imperative to set up a risk assessment mechanism to rate such debts, said Liu Yuhui, a researcher with the Financial Research Institute of the Chinese Academy of Social Sciences. A major part of local government debts is the local government financing vehicles (LGFV), which act as government-company hybrids to get around strict borrowing restrictions and secure loans from unfettered lending after the central government announced the 4 trillion yuan fiscal stimulus in late 2008 to maintain growth against the global financial crisis. Outstanding loans owed by LGFV totaled 9.7 trillion yuan as at the end of June 2013, up 6.2% from a year earlier, according to the China Banking Regulatory Commission. Mounting LGFV debt is believed to pose a potential threat to China's financial stability.
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