Shanghai plan to lure foreign investors to free-trade zone
The central government will unveil as early as this week a major package of new policies, covering industries from financial services to shipping and transport, as part of its plan to create a Hong Kong-like free-trade zone in Shanghai.
The plan, which could contain as many as 21 separate initiatives, will be a template for the potential nationwide roll-out of structural economic reform and liberalisation, two sources with first-hand knowledge of its contents told the South China Morning Post.
"If these things can work well in Shanghai, they can be copied around the country. The plan is for Shanghai now, but it will also eventually have a major impact on the business environment for foreign investors in the entire country," one source said. The source declined to be identified because of the sensitivity of the information being disclosed.
The sources told the Post that Premier Li Keqiang had taken personal responsibility for approving, in principle, the policy package to support the building up of the new Shanghai free-trade zone in the city's Pudong New Area, but that the mainland leadership was still finalising the exact details.
On July 3, the State Council issued a statement after a meeting chaired by Li saying the free-trade zone in Shanghai would be a snapshot of an "upgraded Chinese economy". Details and rules for how the central government plans to support the project have yet to be officially released.
Shanghai already has three bonded trade or port zones, according to the Pudong government's website. It says the new pilot zone will include all three - at the Waigaoqiao port, the Yangshan deepwater port and Pudong International Airport - within its 28 square kilometres.
The initiative is one of the biggest to attract foreign investors since China entered the World Trade Organisation in 2001.
As the Post has previously reported, the project will include shortcuts for foreign banks to set up subsidiary or joint venture operations, and permission for foreign commodities exchanges to own warehouses in the free-trade zone. It will also likely include the end of a 13-year-old ban on the sale of gaming consoles by foreign firms, provided the likes of Sony, Nintendo and Microsoft make them within the zone.
The sources said foreign companies would also be allowed to set up wholly owned healthcare insurance operations and foreign shipping firms would be able to set up cargo joint ventures.
The plan also envisages overseas human resources and recruitment firms setting up joint ventures. Foreign investors would be allowed to own up to 70 per cent of such ventures established in the free-trade zone, the sources said. Foreign travel agencies would be permitted to set up joint ventures to provide international travel and holiday services to mainlanders, but would not be allowed to offer trips to Taiwan.
The new policy package is the central government's latest initiative to promote Shanghai's ambitions as a global business hub and international financial centre.