China (Shanghai) Pilot Free Trade Zone (SHFTZ or Shanghai FTZ) was approved by the State Council on 17th August 2013. It was the first pilot free trade zone in China, covering the four special customs supervision areas ofWaigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Free Trade Zone.
On 28th December 2014, the National People's Congress authorised the State Council to expand SHFTZ by incorporating Lujiazui Finance and Trade Zone, Jinqiao Economic and Technological Development Zone and Zhangjiang High-Tech Park. The expanded FTZ has a total area of 120.72 km2.
Under the Overall Plan for Lingang New Area of the China (Shanghai) Pilot Free Trade Zone, promulgated on 6th August 2019, a new area of SHFTZ (Lingang New Area) is to be set up to the south of Dazhi river, east of Jinhui Port and south of Xiaoyangshan Island and Pudong International Airport in Shanghai. Initially, Lingang New Area will be extended by 119.5 sq km, including 76.5 sq km in the southern part of Lingang district, 18.3 sq km of Xiaoyangshan Island and 24.7 sq km to the south of Pudong International Airport.
Introduction of Shanghai Free Trade Zone
Waigaoqiao Free Trade Zone & Logistics Park
Waigaoqiao Free Trade Zone is the China's first bonded area and first state-level import-export trade promotion & innovation demonstration area of China. Its economic functions involve free trade, export processing, logistics warehousing, and bonded goods display & trading.Waigaoqiao Free Trade Logistics Park (1.03 sq km) is China's first integrated FTZ-port pilot logistics park, as well as an important base for modern international logistics development.The industry of export processing, modern logistics, international trade and the exhibition of bonded commodities have become its peculiar characteristic.
Yangshan Free Trade Port Area
Occupying 14.16 square kilometers, consists of Little Yangshan Port area, land area and Donghai Bridge which links them together. It acts as the major undertaker of Shanghai's international shipping business and related value-added services, including future delivery, finance lease, commodity exhibition and ship registration.It's also home to the distribution centers for electronic products, vehicles and auto parts, luxury food, and brand clothing. It has been developed into a distribution base for Europe and the United States, an industrial base for staple commodities, an import trade base for domestic market, and a gathering place for shipping enterprises.
Pudong Airport Free Trade Zone
Covering an area of 3.59 square kilometers in Shanghai Pudong International Airport, the comprehensive free trade zone enjoys the most favorable preferential policies and represents a pioneering land for innovative airport services.Under the supervision of customs agencies, the bonded zone is endowed with the most favorable preferential policies and all kinds of airport services. It's the first of its type to own an exhibition hall for lease financing and a service platform integrated with administration, service and finance.The bonded zone also houses a distribution center for high value-added air cargo such as electronic components, industrial parts, medical devices and luxury commodities.
Such government departments, as customs, inspection, quarantine, commerce and taxation are all available in the zone.
Lujiazui Finance and Trade Zone
Lujiazui Financial and Trade Zone is located in the central western part of Pudong New Area and is at the forefront of China’s reform and opening up. It is also the core area for Pudong’s reform and development.Advantages
- Preferential policiesThe State Administration for Industry and Commerce of the PRC (SAIC) plans to set up a modern enterprise registration system that can better serve the companies in Shanghai.
- Geographic advantagesLujiazui Financial and Trade Zone enjoys multiple geological advantages.
- Complete supporting facilitiesLujiazui houses 11 sector markets, involving securities, futures, diamonds, oil, financial futures, agriculture, real estate and human resources.
- Convenient transportationThis area is connected to major transportation networks, including the Chongming-Nantong Highway, Hangzhou Bay Bridge and other major highways.
- Investment servicesIt provides investors with complete commercial services, including consulting, registration, tax registration and policy support.
Jinqiao Economic & Technological Development Zone
With a planned area of 27.38 km2 and 28 skm2 of newly-merged Nanhui Industrial Park, Jinqiao Economic and Technological Development Zone is designed to become a large-scale production base for new energy industry.The output value of automobile industry in Jinqiao accounts for half of that in Shanghai; the output value of electronic information industry accounts for one third of that in Shang; the output value of smart equipment accounts for one fourth of that in Shang.
Zhangjiang High-Tech Park
Zhangjiang High-tech Park has implemented a series of special government support policies to create an attractive environment for the development of high-tech enterprises, including:
- Financial IndustryThe added value created by the financial industry in Lujiazui Financial and Trade Zone reached RMB 99.16 billion ($15.76 billion) in 2011, embracing a year-on-year growth up 10.8%
- CommerceMany international high-end commodities and service brands have established their China/Asia-Pacific head offices in Shanghai.
- Shipping Service IndustryShanghai has planned to develop Lujiazui as its core functional area for international shipping. To accomplish this goal, Lujiazui Shipping Center has spared no effort to recruit talents in 2011.
- Trading IndustryThe rapid development of wholesale industry has promoted various kinds of social consumption.
- Exhibition IndustryLujiazui became a favorable area for exhibition development during the year. The exhibition area provided by its main museums totals more than 300,000 square meters.
- Specialized Service IndustryAs the detrimental effects exerted by the global financial crisis diminished in 2011, the service enterprises in Lujiazui operated well and transformed losses into profits for the first time since the crisis.
- Technology support
- Human resource incentives
- Financial support services
- Facility support services
Lingang New Area will have four innovations designed into its systems. First, by focusing on becoming a zone with special economic functions and commanding greater global influence and competitiveness, Lingang New Area is setting up higher development standards in pilot reforms.Second, by actively serving the national strategies of Belt and Road and the Yangtze River Economic Belt development, Lingang New Area will emphasize integration into the Yangtze River Delta development strategy.
Third, by focusing on key industries like integrated circuits, artificial intelligence, biomedicines and civil aviation, Lingang New Area will support measures dealing with core areas such as investment environment, trade oversight, international talent flow and taxation. This is designed to help establish an open industrial system that is competitive in the international market.
Fourth, through the establishment of Yangshan Special Comprehensive Bonded Zone, Lingang New Area will explore the implementation of regulatory policies that are based on safety supervision while offering a higher level of trade liberalisation and facilitation.
Advantages that SHFTZ can offer to companies
In terms of the business operation for companies and organizations, some of the types of business are only available in the nationally forerunning Shanghai Pilot Free Trade Zone (SHFTZ).Also, there are some types of business that can be operated wholly in SHFTZ and some partially outside the zone. SHFTZ bears advantages in five aspects.
SHFTZ's first advantage lies in filing management on negative list. It is only SHFTZ that has consistent control over domestic and foreign capital off the negative list being implemented. In another word, when it comes to the registration of foreign-invested companies and projects, it can get handled simply, quickly and efficiently in SHFTZ, while in other places it shall undergo examination and approval on a case-on-case basis, which can be a long and arduous process.
The second advantage lies in the openness of its services and manufacturing industries. Since its establishment, the zone has issued 54 opening-up measures in two batches, involving the service industry and some fields in the manufacturing industry. All these opening-up measures are only being piloted in the zone.
SHFTZ implements filing management over foreign investment. Previously, foreign investment had to be examined and approved by the authorities concerned, and it used to take three to six months for the procedures to be completed. Now foreign investment of less than $300 million only need be filed in the zone, and it can be completed in three working days.
A new trade facilitation mode also constitutes one of the zone's advantages. The special customs supervision areas in the zone are piloting a mode that allows ease of control on the first line, effective and efficient control on the second line and free trade within the zone. The zone has developed a series of institutional arrangements for trade facilitation involving customs clearance, inspection and quarantine and selective tax, and promoted the rapid development of a series of new types of business, ranging from single window for international trade to the regulation of goods and status classification.
SHFTZ also boasts financial innovation as an advantage. Financial openness and innovation are the highlights of the zone's reforms. At present, SHFTZ is the only pilot zone of free trade account-based separate accounting and cross-border RMB and foreign currency financing. Some types of business, such as the two-way cross-border RMB cash pool, are well received by the zone's companies and have been promoted and copied throughout the country. However, it is still simpler and more convenient to handle such business in the zone.
Q:What does it mean when FTZ allows foreign companies and Chinese private investors to enter banking business?
A: Banks in the FTZ can do foreign currency business without any restrictions. JV banks and banks with limited licenses are allowed to operate in the FTZ.
Q:What does offshore business in the FTZ mean?
Offshore business means that enterprises use overseas resources to manufacture products or provide services for overseas customers. It gives the enterprises with four distinct advantages, namely tax reduction, trade connections with other countries, freedom from foreign exchange control, and a high level of business privacy. Offshore finance is the main part of offshore business. It absorbs funds from overseas clients and provides loans, documentary bills and other services to overseas clients such as cross-border payment settlement, foreign currency trading, and business consulting.
Since Shanghai Free Trade Zone varies in district, the business preferential policies are different from one to another. What’s more, policies may be subtly altered at a certain period of time.Based on real conditions above, Elite Stage strongly suggests that it is better to register an office address (in Shanghai FTZ) with professional experts’ guidance.Address Registration Service
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