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China to start rolling out Shanghai FTZ reforms in 3 months

An archway posted with the sign of China (Shanghai) Pilot Free Trade Zone is surrounded by scaffolding in Shanghai.
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An archway posted with the sign of China (Shanghai) Pilot Free Trade Zone is surrounded by scaffolding in Shanghai.

China will begin rolling out financial liberalization reforms in the Shanghai free trade zone (FTZ) within three months, the People's Bank of China (PBOC) said in a statement on Wednesday.

The announcement came a day after the central bank provided additional detail on the policies it intends to trial in the Shanghai FTZ, launched in September, to help restructure the world's second largest economy away from its credit-intensive, export-focused model.

(Read more: Shanghai's free trade zone - What's the hype about?)

"Financial reform in the pilot zone is not in the past tense, nor the future tense, but the present tense," PBOC Shanghai chief Zhang Xin said in a statement posted on the bank's Shanghai branch website.

"In about a year, we will implement new financial measures that can be copied and extended in other areas."

Zhang said the reforms would be launched within three months, evaluated after six months and formal policies would be fully implemented by the end of a year.

The policies will serve as models for other Chinese regions as they move to create their own FTZs, Zhang said.

Investors have been anxiously awaiting the release of details and timelines for the reforms which include liberalization of interest rates - seen by economists as a key lever for Beijing to reduce wasted and misallocated investment - and letting money move more easily in and out of the country.

(Read more: China's economic reforms: What you need to know)

Economists have pointed out that a particular challenge for Shanghai will be implementing reforms in such a way that they are not easily arbitraged by companies outside of the zone, making them de-facto nationwide reforms.

The central bank said on Monday that it would use special tagged bank accounts for companies and individuals in the zone, making it easier to treat transactions between accounts inside and outside of the zone as cross-border flows.

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