Australia turning to Shanghai for free trade therapy
Updated: 2014-01-09 13:24
(Xinhua)
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SYDNEY - After nine years of intractable negotiations, the failure to secure a free trade pact between China and Australia looks likely to become a big win for the three-month-old Shanghai Free Trade Zone (FTZ), with major Australian bank Westpac the latest to urge Australian business back to China.
Andrew Whitford, Westpac's head of Greater China, told local media this week that Australian companies seeking genuine access in China would enjoy enormous benefits from establishing a foothold in the Shanghai FTZ.
"I see companies that are involved in agriculture or companies that are involved in hard commodities that set up in the free trade zone would have enormous opportunities," Whitford told the Australian Financial Review on Thursday.
The Shanghai FTZ opened in late September and its experimental mantra will see 18 mainly services based industries (the majority of which are services based financial, shipping, business, professional, cultural and social), explore commerce with groundbreaking tools from the liberalization of interest rates, RMB convertibility and more liberal foreign investment criteria.
However, it was the December announcement that foreign companies in the FTZ will be empowered to issue yuan-denominated bonds for repatriation that really ignited local interest.
"As a foreign company setting up in the free trade zone, it is going to be a lot easier to be able to raise funds. Foreign companies will be able to issue RMB bonds and repatriate the funds back offshore or put the funds onshore into China.
"That is a major concession and a major change. That is a significant step forward," Whitford said.
Westpac, Australia's second-biggest bank by market value, and one of the country's four pillar banks (the Big Four), has long held interests in China, having established itself in Hong Kong in 1997 with branches today in Shanghai and Beijing.
Sydney-based entrepreneur and BRIC expert David Thomas told Xinhua that the full convertibility of the Chines currency in the FTZ will allow foreign companies to raise capital through derivatives trading or private share placements.
"A huge step forward for the local financial services industry. "
Thomas said that Australian supporters of the new FTZ are regarding it as an alternative to just sitting and waiting for a free trade deal to materialize.
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