Coastal hub upgraded in trade zone expansion

Shanghai’s free trade zone is being expanded to include Lingang on the city’s southeast coast, where Tesla is building its first overseas factory and the world’s largest planetarium is under construction.

The Ministry of Commerce and city officials on Tuesday formally announced that the China (Shanghai) Pilot Free Trade Zone will expand from 120 square kilometers to 240 square kilometers. It is the second expansion since the zone was created in September 2013.

Lingang will be given greater access to and control over autonomous development, autonomous reform and autonomous innovation, Wang Shouwen, vice commerce minister, told a press conference in Beijing.

Wang vowed to support Lingang in intensifying institutional innovation, carrying out high-standard and high-quality development, accelerating the formation of a more mature institutional system and management, and inspiring local businesses to expand into international markets.

Chen Yin, executive vice mayor of Shanghai, said Lingang had a certain development space, perfect international transport conditions, and easy-to-implement risk prevention and control measures.

“The transport condition in Lingang is very advantageous. With the support of Yangshan Deep-water Port, Pudong International Airport, railways, highways, rail transit and high-grade inland waterways, Lingang has the most perfect transport conditions among free trade zones throughout the world.

“They can give full play to the international transport hub of Yangshan Deep-water Port and Pudong airport to support trade and industrial development,” Chen said.

Chen also said that the special customs supervision areas and industrial parks such as equipment manufacturing, R&D innovation and financial services will go ahead of the rest.

“They have better industrial foundation and supporting conditions, and are conducive to the implementation of new policy and institutional reforms,” Chen added.

Chinese Premier Li Keqiang said the inclusion of Lingang will promote high quality development and continue the process of market reform and trade innovation.

“Unlike the existing pilot free trade zones, the new area of Shanghai FTZ is not simply the expansion of the space or the translation of the policies of the pilot free trade zones, but to implement institutional innovation in a broader field, at a higher level and with greater efforts to promote reform and opening-up,” he said.

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Nearly 60,000 companies are registered in the zone, a fifth of them with foreign investment totaling US$25 billion.

Lingang, on the East China Sea, is a relatively new city, built as a modern example of international competitiveness. It serves as a hub for cutting-edge science and technology, intelligent manufacturing and the “Made in Shanghai” campaign.

Earlier this year, Tesla founder Elon Musk was in Lingang to break ground for the company’s first overseas factory — the largest foreign-funded manufacturing project yet built in Shanghai.

The Tesla Shanghai Gigafactory will integrate research and development, manufacturing, sales and other functions, with an annual production capacity of about 500,000 all-electric vehicles.

Artificial intelligence and robotics are two key priorities in Lingang’s industrial development.

Enhancing the area’s commitment to science, the Shanghai Planetarium of the Shanghai Science and Technology Museum is due to officially open in 2021. The facility will celebrate the history of Chinese astronomy and reflect the future ambitions of the nation’s space program.

Lingang is also home to Shanghai Ocean University, a pioneer in marine studies and research.

Other emerging industries promoted in Lingang are software, information technology, integrated circuitry, aeronautics, energy saving and environmental protection.

Apart from a bridgehead to serve the Belt and Road Initiative and the Yangtze River Economic Belt Development Plan, Lingang also further emphasizes service and integration into the integrated development strategy of the Yangtze River Delta, and adds such content as “strengthening the coordinated innovation and development with the Yangtze River Delta” and “driving a new round of reform and opening-up in the Yangtze River Delta,” according to Chen.

Chinese President Xi Jinping has called Shanghai’s pilot free trade zone a “strategic measure” to promote reform and opening-up in the new era.

In its six years in existence, the zone has pioneered new approaches, including the nation’s first “negative list” to simplify areas open to foreign investment and breakthroughs in the reform of foreign capital management, the streamlining of issuing business licenses, the fast-tracking of customs clearance and the development of free trade accounts.

The zone has generated 202 institutional innovations that can be replicated throughout the country.

The free trade account system allows companies and financial institutions in the zone to independently carry out overseas financing, with less foreign-exchange control.

The separation of business licenses and administrative approvals in the zone has benefited businesses, such as fresh product deliveries, vocational training, lab-to-shelf medicines, cosmetics imports and registration of medical devices.

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

The number of applications for construction company qualification increased 144 percent in 2017 and 111 percent in 2018.

A national cross-border e-commerce demonstration park has been established in the 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.

Not long ago, China’s first free trade agreement preferential tariff application system, called Smart FTAX, officially started operation in the zone, providing one-stop services to companies. 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 countries.

In addition, the international trade “one counter” system enables paperless operations in applications for import licenses and customs clearance.

The free trade zone uses big data technology for monitoring key fields and emerging sectors, uploading figures to the city’s public credit information service platform.

Commercial banks in the zone are allowed to form asset investment and management companies without any cap on foreign ownership, and foreigners will be allowed to take majority stakes in domestic life insurance companies based in the zone.

The zone will also accelerate the Shanghai-London Stock Connect.

The zone counts among its achievements China’s first reinsurance broker, the first foreign-funded vocational training institute, the first wholly foreign-owned yacht design company, the first foreign medical institute, the first wholly foreign-owned engineering design firm and the first foreign certification company to adopt international food safety standards.

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