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  • Sep 19, 2014
  • Updated: 4:25am
NewsChina
ECONOMY

Hong Kong faces new competition as Shanghai plans free trade zone

As acting mayor announces expansion of city's bonded areas, analysts say Hong Kong could face serious competition as top trading hub

PUBLISHED : Monday, 28 January, 2013, 12:00am
UPDATED : Monday, 28 January, 2013, 10:04am
 

Poll

  • Yes: 48%
  • No: 52%
28 Jan 2013
  • Yes
  • No
Total number of votes recorded: 698

Shanghai will start building a free-trade zone this year in a major step towards its long-term ambition of becoming a leading international trading hub.

The first step will be to upgrade and expand the city's bonded areas, where goods can be imported, processed and re-exported without the intervention of customs authorities.

It would be the first such free-trade zone in China if approved by the central government, Xinhua said. The announcement was made yesterday by Shanghai's acting mayor, Yang Xiong , in the government report delivered at the municipality's People's Congress.

"In 2013 … we will build the pilot case of the free-trade zone in accordance with the state's planning," Yang said, adding that the municipality would push forward reforms including foreign-denominated offshore bank accounts and financial leases.

The metropolis wants to attract 150 more multinationals to set up their regional headquarters over the next five years.

Xinhua yesterday quoted Wan Zengwei, director of the Pudong Academy of Reform and Development in Shanghai, as saying the project would take about three years to complete.

The mayor's report did not give further details on the zone, which analysts said could become a competitor to Hong Kong if it were big enough and competitive tax polices were approved by the central government.

Xinhua yesterday said the new zone would require better financial services such as cross-border financing businesses and international trade settlement.

Christopher Cheung Wah-fung, legislator for the financial services sector, said Shanghai would be more of a threat to Hong Kong than the Qianhai development zone in Shenzhen as Hong Kong businesses could take part in the latter as it was just across the border.

The business sector of Hong Kong will need to strengthen and improve itself to prepare for the opening up of Shanghai to international investors

"The business sector of Hong Kong will need to strengthen and improve itself to prepare for the opening up of Shanghai to international investors," he said.

Yang supported a free-trade zone when he headed the Shanghai Free Trade Zones Administration, which oversees the Shanghai Yangshan bonded port area, the Shanghai Waigaoqiao bonded area and the Shanghai Pudong Airport bonded area - all in the eastern part of Pudong. The trade volume of the three areas totalled US$100 billion last year, Xinhua said.

Yang was quoted by the Oriental Morning Post as saying at a meeting of the administration in 2011: "The Shanghai Free Trade Zones Administration should … actively explore a way of upgrading the bonded areas to form a free-trade zone which follows international standards."

The plan, if successful, would help Shanghai to rank higher among international metropolises, Xu Mingqi , a researcher at the Shanghai Academy of Social Sciences, said.

Yang said Shanghai's GDP growth target was 7.5 per cent, the same as last year.

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This article is now closed to comments

megafun
QuianHai/Shenzhen or Shanghai are still not a threat until China sort out its legal system and corruption.
megafun
Moreover, I still haven't seen any HK, or multi-national, keeping the majority of their money in a mainland Bank, in Shanghai or Shenzhen. Only when China stops, and promises never again, to restrict money movements in mainland Bank accounts will they gain an upper hand!
pangkf
No, Hong Kong cannot compete with Shanghai in terms of money and market size. What's more, Shanghai is fully backed by the China Government in reality. For the next generation of Hong Kong, I hope we have enough luck to sustain our long term development.
TheFundamentals
50% of the traffic will go to Shanghai.
HK will be only a half of its present self.
Camel
And now, are you happy that everything is going down in HK? You should fear Shanghai, yes, but more you should fear Qianhai, which is just across the border and getting all the support HK enjoyed the last 2 decades. But at least we can now sing again "God save the Queen".
CatInAFlap
Ofcourse Beijing is smarter than all of you. Bring Hong Kong's legal, education and health service down and closer to Shanghai's - either in reality or by perception - and Hey Presto - level playing field! These boys up north are smarter than the average Dreambear!
superdx
Happy to see all the truckers, container ports and pollution go
joyalsofi
"Yang said Shanghai's GDP growth target was 7.5 per cent, the same as last year." Contrast this and the entire concept of this business as usual article, and most published articles, with this from the Proceedings of the Royal Society Biological Sciences:
"Can a collapse of global civilization be avoided?"
****rspb.royalsocietypublishing.org/content/280/1754/20122845
achiang
We all must understand that it's not possible to compete with Shanghai on a $ basis, they simply a larger population and the support of the entire government. What Hong Kong needs to do is invest money, time and resources into high-return fields and industries which have to grow organically.
It is no coincidence that despite China having millions of college graduates, they have no internationally respected brand or company.
babyhenry
Lenovo, Huawei, ZTE, QQ, Alibaba, Haier, CHina Mobile, (Although its a SOE its one of the most competitive mobile services company in this world which is also developing its own tech). BTW HUawei is also finally making Chips and CPU which FYI is a big break through.
The support of the entire gov't have been a hindrance for the Chinese to boom period. I will argue if Beijing back off and let Chinese do what they got to do to boom, there will be much more brands than the few listed.
HK? Cheung Kong, SHK, Henderson, HUng Lung, MIdland, Centaline....what else Watsons?

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