Higher ex­pec­ta­tions seen for Shang­hai’s free trade zone

China Daily (Canada) - - FRONT PAGE - By SHI JING in Shang­hai

shi­jing@chi­nadaily.com.cn

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.

GAO ERQIANG / CHINA DAILY

is fac­ing higher ex­pec­ta­tions from gov­ern­ment, en­ter­prises and re­searchers.

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