The State Council on March 31 issued a plan on comprehensively deepening the opening-up and reform of the Shanghai pilot free trade area (FTA), making further deployment on the further reform of Shanghai pilot FTA. This is the third version of plan since the establishment of Shanghai FTA, marking the reform of Shanghai FTA entering the third stage.
The plan consists of 7 parts with 23 terms. Compared to the previous two versions, many measures are deepened. There are also many new highlights, such as measures on the government management system reform, investment supervision system reform and trade facilitation.
"New negative list, construction of free trade port, supporting high-quality foreign enterprises to use the capital market in Shanghai to grow, improving cross-border services trade, offshore tax arrangement and government capacity in the high-end services sector are all highlights in the plan. There is a large room for imagination. It is worth expectations,” said Sun Yuanxin, vice president of the Free Trade Zone Institute of Shanghai University of Finance and Economics.
He believed that the plan sets higher targets for Shanghai FTA and gives more time for Shanghai to explore. It is now nearly four years away from when it is required to achieve results in 2020.
There is large imagination room for building free trade port
The plan requires that Shanghai should comprehensively deepen the reform and opening up of the pilot FTA in accordance with the highest international standards and the best FTA; adhere to institutional innovation and strengthen the system integration of reform; further increase the pressure test; take more efforts to change the government’s functions and focus more on the system integration of opening-up, pioneering, risk prevention and control, interactive development and reform measure so as to provide reference for the reform and innovation of other pilot FTAs in China and accumulate more experience in the reform and opening up.
Particularly, the free trade port was first mentioned as an intact notion. According to the plan, Shanghai FTA will build a free trade port in the Yangshan Bonded Port Area, Shanghai Pudong Airport Bonded Area and other special customs supervision areas.
According to the plan, the free trade port will adopt an intensive management system as the government authorizes. Under the prerequisite of effective risk control, relying on an information-based supervision means, it will scrap or minimize trade controls for goods imported to the area and minimize the application formalities. It will also explore a management system in finance, foreign exchange, investment and immigration that is consistent with the international practice, establish and improve the risk prevention and control system.
"The construction of free trade port is one of the biggest highlights in the plan," Xu Mingqi, Secretary-General of the Shanghai FTA Research Coordination Center, told the Shanghai Securities News.
“Opening up in the first level” and “safe and effective control in the second level” have always been a major characteristic of the supervisions of the FTA. By “opening up in the first level” it means that goods imported from overseas can enter the FTA without paying any tax, and goods in the FTA can also export to overseas without paying any tax. By “safe and effective control in the second level” it means that goods that enter other areas of the country from the FTA should be taxed according to the law.
Xu Mingqi believed that this means that the Shanghai free trade port will make substantial progress in the opening-up at the first level in the future. There may be new special policies on goods, personnel and foreign exchange, which will facilitate multinational companies to be engaged in international trade and technological innovation by taking use of the free trade port. In addition, if the Yangshan Port is built into a free trade port, the Luchaogang Port on its neighboring will also see new impetus for development.
Sun Yuanxin also told reporters that there are many possibilities in the free trade port and there is a large room for imagination.
Increase financial support for the “Belt and Road” initiative
Financial reform has also been a focus and hot potato in the reform of Shanghai FTA. The plan again confirmed that the Shanghai FTA should further deepen the opening-up and innovation of finance and strengthen its linkage with the construction of Shanghai International Financial Center.
The plan proposes that the Shanghai FTA should speed up the construction of an international financial market system, build a global renminbi service system, orderly promote the pilot convertible capital projects on, speed up the establishment of a financial regulatory coordination mechanism, enhance the financial regulatory and prevent financial risks.
Particularly, the plan emphasized that the Shanghai FTA should serve the construction of the “Belt and Road” initiative.
According to the plan, the Shanghai FTA should enhance its financial service function for the construction of the “Belt and Road” initiative. It should promote an in-depth cooperation and inter-connectivity between Shanghai International Financial Center and the financial markets of countries along the “Belt and Road”. It should strengthen strategic cooperation with offshore RMB market, effectively promote foreign institutions and enterprises to issue RMB-denominated bonds and asset securitization products, support high-quality foreign enterprises to use the capital market in Shanghai to grow, attract the central banks, wealth management funds and investors of countries along the “Belt and Road” to invest in the domestic RMB assets and provide financing services for the “Belt and Road” initiative.
Xu Mingqi believed that the Shanghai FTA will further open up its financial sector in the future. The financial reform in Shanghai should serve not only the development of the local but also the construction of the “Belt and Road” initiative.
"These are new content. It requires Shanghai to strive to carry out these new ideas in the reform and opening-up process of the FTA," he said.
Translated by Coral Zhong
Latest comments