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  • Jul 26, 2014
  • Updated: 11:31am

Shanghai Free-trade Zone

Shanghai Free-trade Zone is the first Hong Kong-like free trade area in mainland China. The plan was first announced by the government in July and it was personally endorsed by Premier Li Keqiang who said he wanted to make the zone a snapshot of how China can upgrade its economic structure. Other mainland cities and provinces including Tianjin and Guangdong have also lobbied Beijing for such approvals. The Shanghai FTZ will first span 28.78 square kilometres in the city's Pudong New Area, including the Waigaoqiao duty-free zone and Yangshan port and it is believed it may eventually expand to cover the entire Pudong district which covers 1,210.4 sq km of land.

NewsChina

China launches its first free-trade zone in Shanghai

Shanghai Free Trade Zone billed as a major step for financial reforms

PUBLISHED : Sunday, 29 September, 2013, 11:56am
UPDATED : Sunday, 29 September, 2013, 6:54pm

Operations formally kicked off on Sunday at a new free trade zone in Shanghai that China’s government has billed as a major step for financial reforms and economic experimentation, but significant changes look to be years away.

State media reported that a first batch of 25 Chinese and foreign companies were granted licenses to register in the zone.

The China (Shanghai) Pilot Free Trade Zone is a nearly 29-square-kilometre district that covers four existing special trade zones in Pudong district, including one at the airport.

China’s State Council formally announced rules for the new free trade zone on Friday. They outline goals to upgrade financial services, promote trade and improve governance as well as measures to encourage foreign investment in 18 sectors in the country’s tightly regulated service industry.

There are also plans to experiment with the convertibility of China’s tightly controlled currency, the yuan, and let market forces rather than regulators set interest rates.

The zone is expected to serve as a laboratory for such financial experiments before they are rolled out elsewhere in China. No timeline was given for any changes, but rules in the zone will be introduced over a three-year period, according to the announcement.

At a ceremony marking its opening, Commerce Minister Gao Hucheng said the government hoped the zone would act as “an experimental field to conduct economic reform” and promote economic development nationwide.

The Shanghai zone has been touted as the most important attempt at economic reform since the establishment of the country’s first special economic zone in 1980 in Shenzhen, next door to Hong Kong.

Like all previous economic experiments, this project is going to be a work in progress
China economist Wei Yao

That zone allowed in foreign investment aimed at harnessing cheap labour to build a manufacturing industry that became a driving force in helping China eventually become the world’s second-biggest economy.

The government has pledged to open up 18 service industry sectors to foreign investment, including shipping, law and engineering. Foreign-owned performing arts agencies and medical institutions will be allowed.

The sale of video game consoles, which are banned in China, will also be allowed, pending approval from authorities of individual games and systems.

Another initiative will permit foreigners to set up joint venture talent management agencies with local partners.

The rules say the opening-up measures will be applicable to companies that are registered in the zone.

Foreign companies will also be allowed to provide some Internet services, though the official Xinhua News Agency reported before the launch that Internet restrictions would not be lifted, following a report by a Hong Kong newspaper that banned websites such as Facebook would be unblocked inside the zone.

Dai Haibo, deputy secretary general of Shanghai’s government and vice-director of the zone’s management committee, said it would take three years to determine whether the zone’s rules and system were effective.

After three years, the country will build on the experience gleaned from the Shanghai free trade zone and there may be further reform goals, he told a news conference following the official opening ceremony.

Wei Yao, a China economist at Societe Generale, said in a research note that setting up the zone in Shanghai, a city of “great strategic importance,” was a clear sign that policymakers wanted to push for fast economic liberalisation.

“The framework that is shaping up looks rather promising, although details of most measures are to be put in place over the course of six months to a year,” she wrote. “Like all previous economic experiments, this project is going to be a work in progress, subject to constant refinement.”

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This article is now closed to comments

hodfords
Interested to know every minute detail of what is different about this zone.... Several items to consider :- (i) relaxed taxation system on imports? wines, handbags, milk powder,etc - if so then borders will need to be setup otherwise everyone in China would flock there to buy every imported tem.
(ii) allow foreign banks to operate like a local bank -- the rest of China will come here to get financing? (iii) No-cap on Yuan convertibility - it will become a money laundering hub -- not possible to implement without borders being setup.....
Can the SCMP and other media outlets actually spell out one single thing that this free trade zone does differently to the rest of China as opposed to waffle on with open-ended statements...
To me - It just sounds like another scam to get foreign investment....
jeffrey.forsythe.52
Once again an article about how wonderful it is to trade with the Chinese Communist Party and get rich quick. This attitude, that is the general consensus of most Westerners, is far far from the truth of the matter. Since 1949, the gangster Chinese Communist Party has murdered eighty million of its own people and is now in the process of torturing, enslaving and murdering the tens of millions of innocent Falun Gong practitioners who live there. None of these atrocities are ever mentioned by Western media because of corporate greed. What goes around comes around.
johnh
Hopefully these reforms will lead to a freer and more prosperous China
 
 
 
 
 

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