Shanghai Free Trade Zone, a jump in the economic reform policies in China
The General Plan established to set up the Shanghai Free Trade Zone provides an ambitious project, which would be achieved in 10 years.
Indeed, the contemplated project would cover 28 square kilometres and would include the Waigaoqiao Port, the Yangshan Deep Water Port, and the Pudong International Airport.
The Plan would also include various incentives measures for local and foreign companies which would do business in the zone. In this respect, the follow main measures would apply:
- Liberalisation of interest rates: It is predicted that the liberalisation of interest rate would be more comprehensive in the Free Trade Zone (“FTZ”);
- Simplification of customs formalities regarding the free movement of goods: customs procedures would be simplified. The entry of goods should not face inspections or other forms of customs interventions;
- Simplification of approval procedure for foreign invested banks: foreign invested banks would benefit from abridged approval procedures to set up their branches or affiliates in the FTZ. Foreign invested banks would also use a simplified process to create joint ventures with Chinese investors;
- Authorisation to set up wholly foreign–owned (“WFO”) healthcare insurance: these WFO could run insurance operation in the FTZ, contrary to the legislation applicable to currently in this matter and which provides that foreign investors can hold up to 50% in the share capital of domestic healthcare companies;
- Reduction of approval requirements for foreign companies which want incorporate affiliates: the reduction of these approval requirements would include an exemption to submit a joint venture contract when entering into a joint-venture agreement with a Chinese company, referring to simple registration procedure instead of a approval by a Commerce Commission;
- Chinese companies which intend to invest overseas may benefit from reduced limitations: the limitations to raise funds overseas may be reduced. In addition, approval requirements may be removed for companies which want to invest abroad in specific fields.
The pilot program of the FTZ is expected to boost trade and regional integration and would provide a strong incentive both for foreign and domestic companies with best-equipped and largest trade ports in the world.