(Yicai Global) April 23 -- Shanghai is pushing for a new experimental area in the city's free trade zone, the first of its kind in China, following through on a development goal Chinese President Xi Jinping set in a speech last November.
The step would not only expand the pilot FTZ, but it is also expected to deepen and break through various existing policies, Prof. Shen Kaiyan, head of the Institute of Economics at the Shanghai Academy of Social Sciences, said at a recent seminar.
Xi proposed adding a new section to the FTZ during a speech he gave at the opening ceremony of the first China International Import Expo, supporting Shanghai's investment and trade liberalization experiment to build up know-how that can be replicated across the country.
Launched in September 2013, the Shanghai FTZ has unveiled a so-called 'negative list' for foreign investments (what is left off the list is considered as permitted), but there is much scope for Shanghai to shorten the list compared with highly competitive international FTZs, Shen said. The new area is also expected to lift some restrictions on foreign investment that are not included on the list, she added.
The FTZ's financial arena is still relatively closed though it has set up a financial management system that takes the free trade account system as its core. The new section is expected to further catch up with international standards on new financial services, information transparency and payment and clearing systems.
Policy innovations in the new area also need legal safeguards, Shen added. Most existing FTZ regulations, which were formulated five years ago, need to be updated and improved for current conditions, including the protection of intellectual property, the establishment of financial courts and legal provisions in service trade.
Shen also noted that Shanghai can explore areas such as introducing foreign-funded service trade business represented by medical and education institutions and simplify the complex procedure for foreign employees and senior management to apply for a permanent residence permit.
The FTZ has expanded to span 120.72 square kilometers from 28.72 square km. Industrial companies located above designated size there had combined economic output of CNY496.5 billion (USD74 billion) last year. That was 14.3 percent of Shanghai's total. Imports and exports reached CNY1.46 trillion (USD217.5 billion), or almost 43 percent of Shanghai's total.