The zone will allow certain freedoms for investors to promote innovation, especially in the financial sector. In total, the SFTZ covers 28 square kilometres across three sites. Minor beautification work was completed in time for the 29 September launch. A few days later, the SFTZ became operational. So far, 36 projects are confirmed and have a go-ahead to operate in the zone.

Attitudes towards the SFTZ fall into three camps. First, overt pessimists cite the lack of immediate details and wide-ranging reforms as evidence of impending failure. Second, enthusiasts claim the SFTZ will render Hong Kong’s role as a financial intermediary between China and the world obsolete. Third, cautious optimists seem to best understand the government’s motivations and expectations for the SFTZ. That is, while the intended outcome is clear, how it is achieved remains flexible.

Or, in other words, even though China may be feeling for stones, it still wants to get to the other side of the river.

Pessimists expected to see significant financial reforms, such as interest rate deregulation and hedging and corporate tax reductions. Indeed, the zone has been promoted strongly for its potential role in financial reform. There was also speculation that the ‘Great Firewall of China’, which blocks access to certain internet sites, would be removed. Enthusiasts suggested that the SFTZ would become a model for replication throughout China. In addition, ‘leakage’ from the zone itself, of products and services, was also highly anticipated, as containment would be close to impossible (even though the authorities did announce they would build walls around the three sites). These pundits have all been disappointed. As information has emerged on how the SFTZ will operate, none of the above has materialised. Furthermore, an initial list of 190 ‘no-go’ areas for foreign investors was circulated, including broadcasting, online news and, importantly, a number of financial areas. This was a big blow.

China’s premier and State Council party secretary Li Keqiang, who had championed the initiative, failed to show up at the launch event. Commerce Minister Gao Hucheng was the highest-ranking official in attendance, in what was described as a ‘low-key’ event. The feeling is that without greater commitment and clarity to liberalisation and reforms up-front, the zone risks becoming irrelevant fast. A banker at Barclays Investment Bank even anticipated the SFTZ could become like Qianhai, a new special economic zone in southern China, ‘where there is not much happening’.

While the success of the SFTZ is far from certain, history appears to be repeating itself. The reforms in the early 1980s to encourage manufacturing were initially trialled in the southeastern city of Shenzhen before being rolled out across the country. Now viewed as pioneering, even then details about how the Shenzhen Special Economic Zone would actually operate were sketchy.

So what can investors do in the SFTZ? Sub-sectors are open for investment across six industries: financial, shipping, commercial, professional, cultural and social industries. In the financial industry, where lie the greatest hope and expectations, yuan-denominated bonds can now be issued. Foreign banks Citibank and DBS will enter. Some optimistic banks see their involvement as supporting the state’s long-term strategy to encourage more domestic innovation and ease reliance on investment. HSBC’s chief executive Peter Wong Tung-shun has said that the bank ‘looks forward to participating in the pilot programs within the free trade zone and contributing to its development by leveraging our global expertise’. The authorities also said they will reduce the processing time for business licences and tax registration applications from 29 to four days in the zone. This may not sound like much, but it is a first step, say the cautious optimists.

In addition, optimists will have their political antennae finely attuned towards Beijing. Some of the vagueness of how the STFZ will operate is linked to turf wars among government departments. It is also possible the zone is an entrée for other reforms to be introduced in November, when top Communist Party leaders, including President Xi Jinping and Premier Li Keqiang, meet to discuss economic policy at the third plenary session beginning 9 November. Whether the SFTZ gets a mention at the plenum could seal its fate. Pessimists seem justified in their response and criticism. Yet history suggests that China is going down a well-worn path. The old adage of ‘crossing the river by feeling for stones’ has characterised Chinese liberalisation and reform efforts for decades. It continues to do so.

Investors would do well to put on their gumboots, at least for the moment.

Sacha Cody is a PhD candidate at the China Institute, College of Asia and the Pacific, Australian National University.