China plans to drop all duties at Shanghai Free-Trade Zone, sources say
- Plan would exempt foreign companies from customs duties
- Source says eligibility of US companies still under discussion
China is planning a pilot project to drop all duties and ease procedures at Shanghai Free-Trade Zone, three sources said, as Beijing looks to position itself as a leader in free trade amid its trade war with the United States.
The plan – which may be announced as early as this year – was discussed during Premier Li Keqiang’s visit to Shanghai last month, and leaders planned to discuss it further at their annual gathering in the seaside resort town of Beidaihe in northern Hebei province this month, a source said.
Whether US products and companies would be included in the project remained under discussion, the source said.
The sources declined to be named given the sensitivity of the matter.
President Donald Trump escalated the US-China trade war last week when he threatened 10 per cent tariffs on the remaining US$300 billion worth of Chinese goods imported into the US, beginning on September 1.
An official at the Shanghai zone declined to comment, and the National Development and Reform Commission – China’s state planner – did not comment.
Under the plan, if implemented, foreign firms would not be charged customs duties for goods passing through or stored in the zone, would be able to store merchandise temporarily without customs clearance and benefit from simplified customs procedures.
China pushes reforms in free trade zones as scepticism grows among foreign investors
Currently, duties are imposed by customs at the Shanghai zone.
The sources said that, if successful, the plan could be extended to China’s one dozen free trade zones.
The Shanghai zone, China’s first, was founded in 2013 with the aim of easing international trade, including making cross-border money flows more flexible.
During his visit to Shanghai last month, Li promised greater efforts to further reform and open China’s economy, urging the free-trade zone to align with “advanced international levels”, state news agency Xinhua said.
Critics have expressed doubt that the zones will produce tangible results in resolving complaints from foreign businesses in China that they face unequal competition with Chinese companies.
The zone attracted attention from overseas businesses and was hailed as one of China’s boldest reforms in decades when it was launched, although a lack of detail since then has squandered some of that enthusiasm.
China has announced measures over the past year to improve market access as it looked to deflect criticism of its treatment of foreign companies.
