Free trade area may steal SAR thunder

Hong Kong's edge over Shanghai is in danger of being further eroded as the preferential free trade area deal clinched by the mainland commercial hub covers most of the benefits outlined in the cross-border partnership deal, or Closer Economic Partnership Agreement.文件倉 A draft plan for the Shanghai FTA proposes liberalization of 19 business sectors, in addition to unfettered yuan exchange. Some of the measures will for the first time allow foreign companies to wholly own a mainland subsidiary without partnering with a domestic firm, Agence France-Presse reported. The overall plan is expected to be approved by the State Council on September 27. Foreign-funded banks and joint-venture lenders will be allowed to set up shop in the FTA, as will foreign-funded professional health and medical insurance firms, auction houses and medical institutions, AFP reported. Also expected is increased cooperation in legal services between mainland law firms and their foreign peers.存倉In cargo shipping, limits are expected to be relaxed on foreign investment in joint-venture international shipping firms, and overseas firms are expected to be allowed to run some value- added telecommunication businesses. Even sensitive industries may be opened up to foreign investors if experiments succeed with the Shanghai FTA. ``Once the Shanghai FTA succeeds, Hong Kong will face a diversion of cargo and capital,'' said Shen Minggao, head of China research at Citigroup. ``The coming two to three years is a key period for the FTA and also for Hong Kong's further build-up as an international financial center.'' Despite ``benign competition'' between the two international hubs, Hong Kong should see the urgency for its further progress, he added. Eliza Liu, assistant head of research at CCB International, believes other FTAs - such as at Guangzhou - will not be approved in the short-term until the Shanghai experiment proves feasible. grace. cao@singtaonewscorp.com 迷你倉