Shanghai Free Trade Zone to push deregulation: paper

SHANGHAI (Reuters) - China will further loosen restrictions on foreign investment in the recently established Shanghai Free Trade Zone (FTZ), state media reported on Wednesday.

The so-called "negative list" of sectors and activities banned to foreign investors in the FTZ is likely to shrink to about 130 items this year from the current 190, Zhang Hong, director of the fiscal and financial section of the FTZ management commission, told a press conference on Tuesday, the official Shanghai Securities News reported.

Reform advocates hailed the negative list approach as an important step towards granting business greater operating freedom in the FTZ when the zone was launched last year.

The approach, which allows foreign investment in all areas not specified on the list, contrasts with the approach used in the rest of China, where investment is largely restricted to areas that appear on a "positive" list.

Zhang did not specify which items are likely to be removed from the negative list, according to the paper.

Market watchers were hopeful that the launch of the FTZ last year would pave the way for swift progress on a wave of administrative, economic, and financial reforms, but the commission has been slow to roll out specific rules.