China says Shanghai FTZ won’t replace Hong Kong

But both will compete with each other for offshore business.

The Chinese Academy of Governance sees Shanghai and Hong Kong as having different strategic orientations. Shanghai will mainly serve domestic enterprises while Hong Kong is the launch pad for international capital entering the mainland.

The academy said the aim of the Shanghai FTZ is not to compete with Hong Kong but to reach international standards in terms of convenience of investment and trade, free currency exchange, efficient supervision and a sound legal environment.

The FTZ is also seen as a testing ground for new policies and reform. It will take the lead in driving growth in the Yangtze River Delta and the mainland.

The Shanghai Institute of East Asia Studies said Shanghai and Hong Kong complement each other. Shanghai is playing catch up, lagging far behind Hong Kong in terms of development.

The “one country, two systems” principle is Hong Kong’s biggest advantage.