Chongqing - "Financial reform is an important component of the Free Trade Zone, aimed at facilitating trade and investment freedom," said Dr. Zhang Yong, Deputy Dean of the Shanghai Advanced Institute of Finance at Shanghai Jiao Tong University, during an exclusive interview with iChongqing and Bridging News on May 19.
At the High-Quality Development of Free Trade Pilot Zones Forum of the Fifth Western China International Fair for Investment and Trade (WCIFIT), Dr. Zhang delivered his thoughts on challenges in risk prevention and avoiding systemic risks in financial reform.
According to Dr. Zhang, China has provided strong support for economic reform in the free trade zones, emphasizing that regulatory agencies should balance not only the institutions themselves but also their behavior and implement comprehensive supervision.
Marking an important step in the reform of regulatory institutions in the financial sector, the National Administration of Financial Regulation (NAFR) was officially unveiled on May 18.
The NAFR will be responsible for comprehensive financial supervision, optimizing the financial regulatory system, strengthening the supervision of various financial institutions, and enhancing the scrutiny of financial products. This will effectively curb financial risks and improve the stability and sustainability of the financial market.
In addition, financial reform within the free trade zones focuses on serving the real economy. Establishing various account systems, free trade account systems, and constructing funding pools have facilitated domestic and foreign funds' cross-border aggregation and connectivity.
Dr. Zhang added it could also promote the development of offshore trade, facilitate Hong Kong's role as an offshore renminbi center, and promote the internationalization of the A-shares, China's domestic stock market.
"China's digital economy is at the forefront globally, and data serves as the foundation of the digital economy," said Dr. Zhang.
Currently, overseas user data centers for companies like Xiaomi are mainly in Singapore, resulting in high operation and maintenance costs. Many enterprises hope to establish offshore data direct connection channels and set up offshore data centers domestically to facilitate hosting their overseas business data.
"Chongqing can seize this opportunity and explore the construction of an offshore data island," Dr. Zhang suggested.
For example, Chongqing can focus on countries along the Belt and Road Initiative, such as South Asia, Southeast Asia, and Central Asia, and explore the establishment of several offshore data centers and data service outsourcing pilot zones to create a basic environment where inbound data and domestic data are completely physically separated.
"Moreover, Chongqing has multiple comprehensive bonded zones, which essentially have an inside the national border but outside the customs territory nature," added Dr. Zhang.
By building international offshore data centers in special regulatory areas, data transit and offshore data services can be provided to ensure national security and protect personal privacy while offering data services to overseas users.
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