Top 8 things you should know about China (Shanghai) Pilot Free Trade Zone

【The first Pilot Free Trade Zone in China】

Since it was established on Sept 29, 2013, the China (Shanghai) Pilot Free Trade Zone (FTZ) has carried out institutional reform and innovation in areas of investment, foreign trade, finance and post-filing supervision to form a legal framework for investment and trade within the zone. It has adopted the negative list for investment management, simplified foreign trade supervision procedures, promoted financial system reform to realize RMB capital account convertibility, and advocated post-filing supervision as a way to transform government functions.

The State Council decided on Dec 28, 2014 to introduce the practices of Shanghai FTZ nationwide and also established free trade zones in Guangdong, Tianjin and Fujian. It approved the expansion of Shanghai FTZ by incorporating Lujiazui Financial Area, Jinqiao Export Processing Zone, and Zhangjiang High Tech Park, enlarging the FTZ from 28.78 square kilometers to 120.72 square kilometers to provide more space for reform trials.

【The biggest special-administered area under Customs】

The 10-square-kilometer Waigaoqiao Free Trade Zone, set up in June 1990, was the first free trade zone in China approved by the State Council. After more than 20 years of development, it has attracted tens of thousands of companies, making it the biggest special-administered area under Customs in terms of economic output and range of services. In September 2011, the zone was designated by the Ministry of Commerce as China's first National Model Area for the Promotion of Imports and Innovation. It has become an important trade center in Shanghai, dedicated to building professional trade platforms in 10 categories: liquor, watches, automobiles, engineering machinery, machine tools, medical devices, biomedicine, healthcare products, cosmetics and cultural products. The latter category was accredited by the Ministry of Culture as China's first National Center for Trade in Cultural Products, with trade volume of the products continuing to rise. In 2012, the zone accounted for 43 percent of the watches imported into China, 37 percent of liquor imports and 29 percent of cosmetics. Imports of pharmaceuticals jumped 40 percent to account for 24 percent of the national total, and imports of medical devices rose 29 percent, comprising 21 percent of the national total.

【The most profitable free trade port in China】

The 14.16-square-kilometer Yangshan Free Trade Port, set up in June 2005, was the first free trade port approved by China's State Council. It comprises Little Yangshan Port and the Donghai Bridge connecting the island port to the mainland. The free trade port is a key cornerstone of Shanghai's goal to become a Comprehensive Experimental Zone for International Shipping. The port has attracted companies in industries such as information technology, electronics, automobiles and auto parts, food processing and name-brand clothing. The companies have sited distribution depots in the port and established links with major shipping companies. The port currently is the fastest growing and most profitable of China's 15 free trade ports.

【The first bonded logistics park in China】

The 1.03-square-kilometer Waigaoqiao Bonded Logistics Park, set up in December 2003, was the first bonded logistics park in China approved by the State Council. It now consists of 750,000-sq-m warehouse areas and 140,000-sq-m container transshipment areas. Benefiting from preferential policies such as tax refunds for products entering the park and a favorable location close to Shanghai’s ports, the park has developed into an international purchasing and distribution center in the Asia-Pacific region. Suppliers can send their products to the park, and use Shanghai’s advantages of boasting shipping routes to many areas across the globe to deliver products to buyers worldwide, which greatly reduce procurement costs and damage to  goods.

【The first national-level export processing zone in China】

The 27.38-square-kilometer Jinqiao Export Processing Zone, set up in 1990, was the first national-level export processing zone in China approved by the State Council. The zone is composed of an industrial area and a residential area. The zone has succeeded in transforming from traditional manufacturing to intelligent manufacturing in its focus. It now has become one of the advanced manufacturing bases in Shanghai and in China. Its key industries include automobile and intelligent manufacturing, mobile internet, industrial internet and robots, and emerging industries in the finance sector. Also, its Jinqiao Biyun International Community has become one of the largest international communities in Shanghai. 

【One of the most influential financial centers in China】

The 31.78-square-kilometer Lujiazui Financial City (formerly known as Lujiazui Financial and Trade Zone), set up in 1990, is China’s only development zone named after financial trade and it has developed into one of the most influential financial centers in China.. It now is home to many Chinese and overseas financial institutions such as HSBC, Citibank, Standard Chartered Bank, Development Bank of Singapore, and the Bank of East Asia. It is considered as a financial hub with the most financial institutions, and the most active capital movement in China. It forms part of a core area advancing Shanghai’s goal of becoming an international financial center. Also, it is the place where the iconic Pudong skyline stands, which consists of a large number of landmark buildings such as the Shanghai Tower, Jinmao Tower, Shanghai World Financial Center, and Oriental Pearl TV Tower.

【Silicon and Medicine Valley in China】

The 37.2-square-kilometer Zhangjiang High Tech Park, first set up in 1992, has become known as the Silicon and Medicine Valley in China. With over two decades of development, the park has formed several pillar industries including information technology, bio-medicine, creative culture, low-carbon environmental protection. Therefore, many related national-level industrial bases have landed in the park featuring biomedicine, information technology, integrated circuit, semiconductor, information security, software, and e-sports, among others. A large number of leading scientific research institutes and facilities, including Shanghai Synchrotron Radiation Facility, Shnaghai Supercomputer Center, and Shanghai Aircraft Design and Research Institute of COMAC have also stationed themselves at the park to provide technological and innovative support.

【Pioneer in expanding China’s reform and opening up】

The Shanghai FTZ has become a pioneer in expanding China’s reform and opening up by rolling out a series of innovative and pioneering measures since its inauguration.

In 2013, the zone took the lead in adopting a foreign investment administration model of pre-establishment national treatment plus negative list, making it easier for foreign investors to enter the Chinese market.

In February 2014, the zone began the construction of an international trade single window project to simplify customs clearance procedures at Shanghai ports. The project went operational about a year later, allowing all procedures of customs declaration of goods and vessels to be done online. An upgraded version of the single window was launched at the end of 2015 to further expand its functions. So far, it has served more than 240,000 enterprises. 

In June 18, 2014, the free trade account system started operation in Shanghai FTZ, an innovative move that allows companies registered in the zone to use the account for financing, investment and other cross-border transactions. Firms in the zone can borrow offshore funds, transfer capital between subsidiaries in and outside of China and enjoy greater flexibility in managing foreign exchanges.

To date, more than 70,000 such accounts have opened in the zone, and businesses conducted via the account have reached more than 110 countries and regions.

Many other measures such as simplified administrative procedures and strengthened regulation on potential risks have also been launched to promote investment and trade facilitation, improve government governance, and optimize business environments.