Industry players question Shanghai FTZ's direction

The South China Morning Post quoted a senior executive at a Shanghai shipping firm, expressing doubts about the city's ability to become a world-class trading hub, saying that there is a conflict between the needs of the shipping community and the ambitions of city officials.

"They don't seem to understand the role of a free trade zone and it doesn't make sense to me that the financial sector, rather than trade and shipping, is given priority," the executive was quoted as saying.

Shipping industry officials believe there are good opportunities arising from loosened customs intervention, and they believe the sector should be among the top beneficiaries of the zone. For example the bonded area at Yangshan Port could help Shanghai in boosting its transhipment trade but customs procedures have proved to be a major stumbling block to its development.

In addition, they also believe not enough land has been allocated for the zone to reach its full potential. Plans currently earmark a 14-square kilometre area at the Yangshan Port for the FTZ, about half of which is in Lingang New City.

Analysts believe that the city has good potential to become a regional manufacturing base and attract manufacturing investments there as producers will be able to access both the mainland and regional markets as China endeavours to move up the value chain.

However it remains to be seen what actual plans transpire. Beijing is seen as having grand ambitions for the city to rise as an international financial centre, which may perhaps come at the cost of shipping and trading.