Staff members work at Kela-2 gas field of the Tarim Oilfield in Aksu, northwest China's Xinjiang Uygur Autonomous Region. (Photo: Xinhua)
China's State Council agreed to set up a complete oil and gas production chain in the China (Zhejiang) Pilot Free Trade Zone (FTZ) on Tuesday, which will introduce international traders, let private companies to proceed refined oil products and actively promoting yuan settlement of trade in bulk commodities.
Analysts said the measures show that China's energy market, especially its energy derivatives market, is opening wider to the world.
According to the State Council, East China's Zhejiang pilot FTZ will introduce international investors, including futures exchanges from New York, Dubai, London and Singapore, as well as international oil traders.
"The measures include a set of comprehensive support policies on the basis of the listing of yuan-denominated crude oil futures, in a bid to accelerate the opening of the financial and derivative markets, enhance China's pricing power in the commodity sector, and promote yuan settlement in trade," Qu Xinrong, senior research fellow of the Shanghai Petroleum and Natural Gas Exchange, told the Global Times.
The Shanghai Futures Exchange (SHFE) listed crude oil futures with yuan settlement in March 2018. The construction of the crude oil futures market is one of the important aspects of the opening-up and internationalization of China's futures market, according to the SHFE.
"Measures used in the Zhejiang FTZ will further advance the internationalization of the yuan, and at the same time will make China's capital market more open to the world," Hu Qimu, a senior fellow at the Sinosteel Economic Research Institute, told the Global Times on Tuesday.
To attract foreign investment in the FTZ, a series of beneficial policies have been released.
According to an investment guide released by the Zhejiang pilot FTZ on February 21, all types of foreign-funded enterprises will receive awards of up to 5 million yuan ($704,900) as appropriate, while foreign professionals will receive corresponding subsidies, individual tax breaks and other favorable policies, read the investment manual.
Foreign investors are encouraged to invest in the entire oil and gas industry chain, including oil products, maritime services, petrochemicals, advanced manufacturing, finance, cross-border e-commerce and other energy-related industries, according to the Zhejiang pilot FTZ.
According to the central government, qualified non-state-owned refining and chemical integration enterprises in the Zhejiang pilot FTZ are allowed to carry out pilot exports of oil by-products, and the export quantity shall be arranged on an annual basis as appropriate.