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About China (Shanghai) Pilot Free Trade Zone (FTZ)

    About China (Shanghai) Pilot Free Trade Zone (FTZ)

    Basic Introduction

    Since it was established on September 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 December 28, 2014 to introduce the practices of Shanghai FTZ nationwide and established free trade zones also 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.

    1. FTZ Bonded Area (28.78 sq.km.)

    The bonded area of Shanghai FTZ consists of Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Free Trade Zone. Waigaoqiao Free Trade Zone, founded in 1990, is the first bonded area in China under the supervision of Shanghai Customs; Waigaoqiao Free Trade Logistics Park, established in 2004, is also the first bonded logistics park in China; Yangshan Free Trade Port Area, opened in 2005, is the first bonded port area in China; Pudong Airport Free Trade Zone, set up in 2009, integrates bonded logistics and cargo shipping. So far, 27 innovative policies that were tested in the FTZ bonded area have been introduced nationwide or in selected regions. Soon, 28 more policies covering investment, trade, finance, market opening and supervision will be popularized across the country. Six innovative practices for the customs and quarantine departments will also be copied nationwide.

    2. Lujiazui Financial Area (34.26 sq.km.)

    Lujiazui Financial Area consists of Lujiazui Finance and Trade Zone and Qiantan Area. It is the core of Shanghai International Financial Center, Shanghai International Shipping Center and Shanghai International Trade Center. Work is under way to establish a financial system that follow international rules and practices, attract the headquarters of multinationals with fine services, and carry out reforms to facilitate foreign investment, cross-border trade, international financing and market supervision, and create a good legal environment for businesses. Qiantan Area, which used to be the site of Expo 2010, is a key area for a new round of development in Shanghai and is positioned as a hub of corporate headquarters, maritime financial services, cultural enterprises, sports and tourism facilities, and high-end services.

    3. Jinqiao Export Processing Zone (20.48 sq.km.)

    Established in 1990, Jinqiao Export Processing Zone has become a showcase of advanced manufacturing, production services, emerging industries, and eco-friendly environment. The zone is focusing on administrative and financial reforms, creating good business environment to facilitate trade, and fostering strategic growth industries for sustainable growth and international competition.

    4. Zhangjiang High Tech Park (37.2 sq.km.)

    Zhangjiang High Tech Park is a base for innovations as Shanghai implements the national strategy for sustainable growth. It combines the development of Shanghai FTZ and the Zhangjiang National Innovation Demonstration Area with a focus on enhancing its innovative capabilities and providing a service platform for research, financing, talent recruitment and resources sharing.

    The expanded Shanghai Free Trade Zone will continue to take the national lead in reform and innovation, guard against risks in experiments, cater to the needs of enterprises, make good use of advantages of Pudong New Area, speed up government transformation, make breakthroughs in reform and opening-up, formulate rules for investment and trade that comply with international practices, and contribute to the realization of the Chinese Dream of national rejuvenation.

    Regional advantage

    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 1.03-square-kilometer Waigaoqiao Free Trade Logistics Park, set up in December 2003, was the first of its kind approved by the State Council. It was also the first place in the country to run a pilot project of ¡°interactive development,¡± which allows companies to benefit from the policies and resources of both the free trade zone and the Port of Shanghai. Based those policies and tax rebates, the logistics park and the Waigaoqiao Free Trade Zone create a major center where multinational companies can export and source products in northeastern Asia, and can import non-ferrous metals and information technology components.

    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 3.59-square-kilometer Pudong Airport Free Trade Zone, set up in July 2009, is designed to take advantage of its status as an Asian-Pacific and function as an ¡°experimental area for innovative air services.¡±

    Multinational companies in electronics, medical devices and high-end consumer goods have established distribution centers in the zone and become involved in related financial leasing projects. UPS, DHL and FedEx, the world¡¯s top three express companies, have set up branches in the zone and helped it developed a strong business chain of air freight distribution, financial leasing, express transit and exhibitions of Asia-Pacific trade.