........ Will it be one big leap for China ? This is the Shanghai Pilot Free Trade Zone, which is opening in Shanghai this weekend. Already it is being compared to the launch of the famous Shenzhen Special Economic Zone in the eighties that heralded the economic revolution in China. Is it economic reform 2.0 in China ? Only time will tell.
China is a strange country when it comes to economic freedom. At one level, it resembles the Wild West economically. Anything goes. You can open a business, do whatever you wish , and make tons of money (and hush hush, ignore most laws regulating business). At another level it is more akin to the Soviet Union. In industries like telecommunications or insurance or banking, you can do virtually nothing. Foreign firms are not welcome, Even Chinese firms are regulated with an iron hand.
Conventional wisdom says China is at a major fork in its economic journey. Growth rates are slowing down. Relative to the past, that is - even though every other country in the world will give an arm and a leg to be where China is presently. The investment and export led boom seem to be coming to a "difficult to sustain" phase. Consumption led growth is the prescription from the economists. A second wave of reforms is prescribed - always difficult in China where politically there is always opposition to economic reforms (even Deng Xiaoping faced bitter opposition when he launched the first wave of reforms). There is also the mortal fear that more economic reforms will inevitably lead to political reforms and nothing terrifies the Communist Party of China more than that.
So a low key testing of the next phase of reform is a sensible move. And that's what the Shanghai Free Trade Zone is rumoured to be. Although there is precious little detail in the government announcement, it is widely expected that inside the zone, the financial sector will be deregulated, the yuan will be convertible and industries such as telecom will be open to foreign investment. If that indeed proves to be the case, then this is really a big move with potentially global ramifications.
Even more tantalising is the rumour that there will be other types of freedom too inside the zone , not available in the rest of China. The Great Firewall of China will be lifted it is speculated. Currently inside China, Facebook, Twitter, You Tube, Blogger, Word Press and a host of sites we take for granted in our everyday life are all blocked. The Great Firewall also censors every social website inside China. If you post something that the censors don't like, it will be taken down. If you do it repeatedly, there will be a midnight knock on your door. The wilder speculation is that inside the Zone , censorship would be lifted. If this does come true, it would be an earth shattering development in China.
The world is watching. It could prove to be nothing more than a false hope. Or it could be epoch making. I suspect even the bosses in the Party don't know what it will be. We shall see.
At least China is attempting something. What can I say about India ? Alas.