Research on the Financial Reform and Innovation and Corresponding Regulation in China (Shanghai) Pilot Free Trade Zone

Abstract

The China (Shanghai) Free Trade Zone was established with an institutional framework as a new pilot project as part of the national strategy for reform and opening up. However, it still faces challenges in areas such as industrial function, financial openness, tax policy, and the robustness of enterprises. The highlight of financial reform in the free trade zone is the establishment of a separate accounting system, the design and operation of which determine the creation of institutional frameworks in the free trade zone. Financial reform and innovation in such key areas as cross-border financing systems,, interest rate marketization, reform of the financial markets, foreign exchange management systems, and so on, have made varying amounts of progress. As the deepening of financial reform and innovation demands financial regulation which is supportive and complete, the construction of a regulation system of macro-oversight is needed. Regulation of key areas of reform, such as capital account exchangeability and interest rate marketization, should also be improved accordingly.