Promise of major progress on key financial reforms

A packed auditorium at the Expo Center listens as Shanghai Mayor Yang Xiong delivers his speech on government work at the opening of the annual session of the Shanghai People's Congress yesterday. — Wang Rongjiang

Shanghai's Mayor Yang Yiong has pledged to make major progress on key financial reforms in the city's pilot free trade zone this year, including full convertibility of the yuan, in a bid to serve the city's purpose of being a "pioneer" in the national reform and opening-up drive.

China's first free trade zone was set up in Shanghai last September, aiming to make the city a showcase for financial reform.

"We will make all-out efforts to build the FTZ," Yang said in a speech on government work at the opening of the annual session of the Shanghai People's Congress yesterday.

"To intensify opening up and innovation in the financial sector, we will seek substantive progress with pilot reforms," he said.

He told city lawmakers these included convertibility of the yuan under the capital account, cross-border settlement of the yuan and interest rate liberalization.

China keeps a tight grip on its capital account — investment and financial transactions, rather than those related to trade — on worries that unpredictable inflows or outflows could harm the economy.

Convertibility of the yuan, which means allowing the currency to be freely bought and sold, and with it the movement of funds into and out of China, is the main obstacle preventing Shanghai from competing with global financial centers such as New York and London.

China currently sets deposit rates by administrative order, but the central bank began allowing banks to decide their own lending rates last year.

Yang said that Shanghai is targeting an economic growth rate of 7.5 percent this year, the same as the goal set for 2013, and compared with last year's expected growth rate of 7.7 percent.

"Shanghai will pursue innovation-driven growth as well as economic transform and upgrading," Yang said.

"We will drive reform in all fields and focus on improving the quality and efficiency of economic development through adjusting economic structure, improving people's livelihoods and promoting social harmony as well as stability."

This year's priority in building the free trade zone, Yang said, will be given to form a framework aligned with international trade and investment norms. Shanghai will revise the negative list in a timely manner, he added.

Shanghai would also work towards the launch of crude oil futures, Yang said, but gave no launch date.

Officials have previously said the futures product would be offered through the FTZ.

Meanwhile, more efforts will be made to attract functional departments of financial institutions such as their regional headquarters and support the development of new business formats such as Internet banking, the mayor said.

The city will also push forward the upgrading of the manufacturing sector, committed to moving the strategic emerging industries up the value chain with the market playing a bigger role.

Shanghai will continue to improve its infrastructure and break ground on 103 kilometers of Metro lines this year, while the ongoing construction of 65 kilometers will be accelerated.

The city will also launch the fourth phase of the Yangshan Deep Water Port project and the Shanghai-Nantong Railway Line, while a redeveloped Expo Park will start to take shape.

Shanghai also planned to "gear up" for the start of operations of the new Disney theme park.

City officials earlier this month reaffirmed a deadline for the opening of the park to visitors in 2015.

Shanghai will try to create 500,000 new jobs this year. It also targets helping 10,000 people to start their own businesses.

The city also plans to build and renovate 55,000 subsidized housing units, and deepen reforms in education and health care.

Sex education; illegal food stalls; care for the elderly/A4

Shanghai's new goals

1. Annual GDP growth of 7.5 percent

2. Consumer Price Index kept in line with national price control target

3. Investment in environmental protection to be 3 percent of GDP

4. Elimination of 500 hazardous, heavily polluting and energy intensive projects

5. Increase green space by 1,000 hectares

6. Registered urban unemployment ratio capped under 4.5 percent

7. More than 500,000 new jobs

8. Completion of 110,000 subsidized housing units