FTZ reform benefits more businesses in Shanghai China

   The separation of business licenses and administrative approvals in the China (Shanghai) Pilot Free Trade Zone has benefited a growing number of businesses, such as fresh products delivery in new retail, vocational training, medicines from lab to shelf, cosmetics imports, registration of medical devices and the qualification of construction enterprises.

Amid the reform, the number of new taxpayers (business entities) in Pudong increased by 29 percent in 2017, compared to the end of 2015.

  The registration process for the establishment of an enterprise in the free trade zone now takes two days at most.

The first-time import of non-special use cosmetics — defined as make-up, hair, skin and nail care products, and perfume — is now subject to record filing that replaces the previous    registration and approval system with the time required shortened from three to six months to three to five business days.

  The number of applications for construction enterprise qualification in 2017 and 2018 has increased by 144 percent and 111 percent respectively compared to 2016.

The State Council has decided to promote the reform nationwide.

  At the same time, a new management approach, mainly the in-event control and subsequent monitoring, is being improved. A government comprehensive monitoring system has been established to ensure the sharing of information among registration, licensing, monitoring and law enforcement departments which involves 21 government agencies in the free trade zone and 108 business sectors.

  The free trade zone also optimizes its services and is dedicated to building an all-in-one online platform to facilitate company applications and registration.

  The platform, which went online in March, can cope with all 327 business-related matters in the free trade zone. About 53 percent of these can be approved online. The time taken on average has been shortened from 22 to 3.3 working days.

   Institutional innovations have inspired entrepreneurship.

   More than 57,000 new enterprises have registered in the free trade zone since it was established five years ago. Nearly a fifth of these new firms are foreign-invested involving US$25 billion of investment.

One-stop services

  Record-filing has replaced registration for the establishment of foreign-invested enterprises. A service promotion platform was established for risk monitoring, in-event control and subsequent supervision.

  By the end of June, 2,620 business projects had been launched in the free trade zone. The “negative list” that restricts foreign investment has been shortened from 190 items in 2013 to 45 this year.

  The free trade zone also released a negative list for the services sector last month, for the first time in China, to further open market access for foreign participation in sectors such as transport, insurance and communications.

  The move means overseas services and service providers investing in areas not listed will now be treated the same as domestic companies, reducing red tape and other restrictions.

  Special regulations governing investment by foreign entities, such as requiring a Chinese joint venture partner, will continue to apply to those sectors on the negative list. Based on the list, a total of 159 special administrative measures involve 31 industries in 13 sectors.

  The free trade zone also provides one-stop services for domestic companies to invest overseas. An overseas investment service platform was established to provide services such as legal advice, accounting, assessment, taxation, financing, insurance and agency services.

  By the end of June, the free trade zone had filed 2,043 overseas investment cases involving US$55.62 billion, accounting for 50 percent of the city’s total.

  Domestic companies set off from the Shanghai free trade zone to merge and acquire high-tech or high-end enterprises overseas in fields such as mobile Internet, biomedicine, medical devices, information technology, the Internet of Things and high-end manufacturing.

  The free trade zone issued 25 rules in June to test the ground for further liberalization of the financial sector.

  Under the rules, commercial banks would be allowed to form financial asset investment and management companies without any cap on foreign ownership, and foreigners would be allowed to take majority stakes in domestic life insurance companies based in the zone.

  Meanwhile, the free trade zone is promoting the construction of spot markets of bulk commodities in the metals, energy, chemical industry, mining and agricultural products fields to enhance global competitiveness.

  Six markets of such kind have debuted online involving nearly 500 traders. The transactions last year reported nearly 40 billion yuan (US$5.77 billion).

  The free trade zone also piloted parallel car imports. Nearly 3,000 vehicles were imported this way last year. In the first half of the year, nearly 4,000 vehicles were imported.

 

E-commerce development

  A national cross-border e-commerce demonstration park has been established in the free trade zone’s bonded area. It supports bonded imports, direct purchase imports and general exports and has become the biggest area for the development of e-commerce in Shanghai and has the most complete e-commerce business patterns.

  Bonded repairing and financial leasing are two other highlights given priority to development in the free trade zone.

  Not long ago, China’s first free trade agreement preferential tariff application system (Smart FTAX) officially started operation in the free trade zone, providing enterprises one-stop inquiries and application solutions to preferential tariff treatment in free trade agreements.

  The system was developed by the operation center of the Asia-Pacific Model E-Port Network to facilitate trade among 19 member states and regions, many of which are Belt and Road Initiative countries.

  In addition, the international trade “one counter” system enables paperless operations in applications for import licenses and Customs clearance. With the help of the system, a paperless operation runs through the whole process from the application for import licenses to Customs clearance of more than 90 percent of non-electromechanical products.

  At the same time, a nearly 70,000-square-meter international artwork bonded service center is expected to be in use this year in the Waigaoqiao bonded area.

  The import and export of cultural services reached US$4.14 billion in Shanghai last year, which was top in the country.

  The free trade zone is developing digital copyright and exchange rules based on blockchain technology.

  Shanghai’s digital exports reported an average increase of more than 30 percent between 2013 and 2017.

 

  It also works out Shanghai trade on a global competitiveness index to reflect the strength of the overall service sector.

  Yearbooks on the development of digital trade, cruise ship tourism, techno trade, service outsourcing and trading software are published annually.

  Trade in services in the Shanghai free trade zone reported US$56.6 billion last year, a year-on-year increase of 6.28 percent.