Higher expectations seen for Shanghai’s free trade zone
More breakthroughs are expected for the China (Shanghai) Pilot Free Trade Zone, as it is framed to be the template for China’s economic upgrade and the vanguard of China’s new round of reform and development.
There is no doubt that the Shanghai FTZ has already become one of the most popular cross-border investment platforms in China. The total number of overseas investment projects registered in the area amounted to 369 by the end of May, with the total value reaching $10.7 billion.
According to Li Zhaojie, deputy director of the administration committee of Shanghai FTZ, Shanghai FTZ has created a more efficient business environment for enterprises, but more can be expected, especially in the reform of the taxation system, he said on the sidelines of the half-day seminar on China’s Free Trade Zone held by the China Executive Leadership Academy Pudong last week.
At present, the FTZ authorities, together with the Ministry of Finance as well as State Administration of Taxation, are studying the possibility of coming up with a taxation system, which will help with overseas equity investment and offshore businesses, Li added.
More expectation is given to the Shanghai FTZ, in the hope it will take the lead in the fourth round of China’s reform. During the previous rounds of reform, foreign capital mainly focused on the manufacturing industry, which took a majority of 70 percent of all investment. The situation has changed in 2013, with more importance attached to the service industry. But according to Sun Yuanxin, deputy director of Research Institute for Shanghai FTZ at Shanghai University of Finance and Economics, more progress could be made, with the Shanghai FTZ playing a key role.
“In the first place, the Shanghai FTZ should realize a high degree of openness to foreign investment by holding a global vision, highly open and predictable policies, an international investment system, a highly reliable government, as well as providing more benefits to domestic companies’ employees and a better commercial environment,” he said.
Meanwhile, regulations of various industries, which are not in accordance with the current opening-up policies, should be given a second thought. Only in this way can the Shanghai FTZ realize the target of taking the lead in the new round of reform, said Sun.
“It should be noted that mixed management has become the new fashion in terms of companies’ operation and investment, especially against the national backdrop of Internet Plus initiative. In this sense, the local authorities should update their service and management system,” he added.
According to Yu Nanping, professor from the School of Advanced International and Area Studies at East China Normal University, the key to further development of the Shanghai FTZ lies in financial reform. As the total area of the Shanghai FTZ is quite limited, it is hard to attract a large number of high-end manufacturing companies. The city’s strength in the financial services should be the core of Shanghai FTZ in the following days, he said.
“If you look at Wall Street, it can be seen that every financial talent working there can bring in four to six more job opportunities. This should be the path that the Shanghai FTZ can follow,” he said.
Apart from an accurate orientation, it is the local authorities’ job to provide a comfortable infrastructure, which means the administrative committee should make more efforts to create a stable and justified environment.
“When we talk about the transformation of the government function, which is the essence of setting up free trade zones in China, we talk about streamline administration and institute decentralization from time to time. But on the other hand, it should not be overlooked that the local government should keep a close eye on the areas that they should administrate and regulate. Only in this way, trust can be built and this is the quintessential asset of the society,” he said.
is facing higher expectations from government, enterprises and researchers.