The Chinese free trade zone around Shanghai has been established by Beijing as a laboratory to experiment with financial and other liberalisation policies before they are released across the entire Chinese economy.
Things like interest rate and exchange rate policy in the zone will be able to be tested by the Chinese authorities. So it is important – if financial institutions want to be at the forefront of exposure to these changes and to the Chinese economy – that they establish operations within the zone.
So news in the AFR this morning that Westpac has become the second Australian bank to receive regulatory approval to open a branch within the zone is good for both the bank itself and Australian financial markets keen to capitalise on the rise of China and the internationalisation of the Chinese currency, the renmimbi.
Westpac’s head of institutional banking said Westpac was the number one Australian bank for the conversion of Aussie dollars into renmimbi and the new branch would, “assist the bank’s funding and support trade finance and foreign exchange operations in the region.”
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