New free-trade extension flexes its muscle
Two months after Lingang formally became part of the China (Shanghai) Pilot Free Trade Zone, the port town on the southeastern tip of the city is already implementing measures to add value to China’s expanded opening-up policies.
Its ultimate goal is to become China’s answer to internationally competitive economic zones such as Tokyo Bay, Singapore Marina Bay and the Dubai Free Zone.
The zone’s newest addition promises to offer free access to cargo, easier capital flows, improved transport and relaxed rules on personnel and communications.
It is advertising itself as a friendly place to do business and an environmentally friendly place to live.
Called the Lingang Special Area, it was set up to promote smart manufacturing, modern services and a setting for innovation and healthy competition.
It has unveiled 50 preferential policies related to administrative authority, human resources, finance, taxation, urban planning, industrial development, housing and infrastructure.
One of its most high-profile new companies is US-based Tesla, which opened its Gigafactory 3 in Lingang as its first production site overseas. The first Tesla’s Model 3 body-in-white electric car has already rolled off the production line.
Grace Tao, Tesla’s global vice president, said Lingang is a dreamland for the company. “We look forward to deepening cooperation with all parties in the application of intelligent-networking technology and the promotion of new-energy vehicles in the future to jointly help the new area achieve greater development.”
This is all about institutional innovation at a much higher level. Lingang will focus on international resources, industrial innovation, development, upgrading and transformation.
More than 20 projects with aggregate investment of 11 billion yuan (US$1.55 billion) have begun in Lingang.
The projects mainly focus on intelligent manufacturing, high-end international services and science and technology. They span industries such as integrated circuits, artificial intelligence, bio-medicine, civil aviation and green vehicles.
Since the launch of the new area in late August, activities in all these realms are accelerating, according to Zhu Zhisong, executive deputy director of the Lingang Special Area Administrative Committee.
Eventually, more than 70 projects involving investment of nearly 100 billion yuan are expected in Lingang, Zhu said.
Sixteen financial institutions, including the “Big Four” banks and the Shanghai Stock Exchange, have signed agreements with the Lingang authority to establish branches in the area.
A number of incentives are in place to support the development of the financial sector. They will help financial institutions provide cross-border services, including bond issuance, investment, mergers and acquisitions, and centralized operation of cross-border capital.
Companies and institutions in the new area are being encouraged to initiate offshore transfer business, shipping financing and settlement, shipping index derivatives and “green finance.”
In addition, a trial project related to the integration of domestic and foreign currencies will be based in Lingang. Funds raised from abroad by enterprises, funds from qualified overseas financial institutions and income obtained from providing cross-border services will be allowed to be deployed independently for operational and investment activities in the new area or overseas.
The project supports the facilitation of foreign exchange receipts and payments among Lingang companies and promotes the construction of a fund management center.
Lingang is envisioned as an Asia-Pacific, cross-border capital services and offshore settlement center for multinational enterprises. It will also play a role as a cluster of new offshore trading headquarters, thanks to the customized cross-border free trade policy.
Additionally, Lingang, which is located on the East China Sea, will promote the development of high-end shipping services as part of Shanghai’s ambition to become an international shipping center.
Lingang marks further opening of China’s trade policies and the shift in emphasis on the services industry from manufacturing, said Quan Heng, vice chairman of the Shanghai Federation of Social Science Associations.
Chen Yin, executive vice mayor of Shanghai and director of the Lingang Special Area Administrative Committee, said the new area will eventually cover 872 square kilometers.
Lingang will provide more public services and create a livable and business-friendly modern town with a high quality of life, Chen said.
It will advance education, medical resources, sports, recreation and cultural and leisure activities. In short, an ideal place in Shanghai for people to live and work, according to the Lingang New Area Economic Development Co, a subsidiary of the state-owned Lingang Group and a major developer of the special area.
The core area of an open zone of modern services will be built to the north of Dishui Lake and cover nearly 20 square kilometers, according to the company.
The core will include Asia-Pacific headquarters of financial companies, trade firms, medical institutions, shipping and insurance companies.
The central business district will house office buildings, research and development facilities, startup incubators, investment banks and an offshore international trade community where duty free shopping, exhibitions and auction services are available.