Benchmarking International Practices

Pushing Forward SHFTZ Development

China (Shanghai) Pilot Free Trade Zone Administration

Benchmarking International Practices

Pushing Forward SHFTZ Development

China (Shanghai) Pilot Free Trade Zone Administration

The establishment of China (Shanghai) Pilot Free Trade Zone is a major decision made by the CPC Central Committee and the State Council to push forward reform and opening-up under the new situations, and also a great opportunity for Shanghai to accelerate transformation and upgrading.

•

••

•

•

•

•

Lujiazui Area34.26 km²

Jinqiao Area20.48 km²

Zhangjiang Area37.20 km²

Free Zone (Waigaoqiao)10km²

Free Zone (Pudong Airport)3.59 km²

Free Zone (Yangshan Port Area)14.16 km²

China (Shanghai) Pilot Free Trade Zone

120.72 km²

Free Zone (Logistics Park)1.03km²

Market Entity

As of the end of May 2015, 27092 companies have been

running in the zone (28.78 km2), including 18709 newly

established ones, among which 3398 are foreign companies.

Economic Performance

In 2014, SHFTZ has realized double-digit growth in business

revenue, sales, shipping and logistics service, industrial and

commercial tax revenue; growth in import and export

exceeded national and local average; y-o-y growth in business

revenue hit 20%

Transformation of Govn’t Functions

Convertibility of Capital AccountOpening-up in the Financial Service Sector

Trade Facilitation

Negative List

Institutional Innovation

Investment Management

Trade Supervision

Financial Innovation

Mid-event & Ex-post

Regulation

SHFTZ’s Achievements in Reform and Innovation

Exploring the “Negative List” ApproachShaping A More Open and Transparent Investment

Management System

● The Administrative Approach of “Negative List”

● A Filing System for Foreign and Outbound Investment

● Reform of Business Registration System

● “Single-window” in Market Entry

● Implementing Opening-up Measures

The Administrative Approach of “Negative List”

● Negative List 2013 Version: 190 special administrative

measures, 80% of them become more open and transparent.

● Negative List 2014 Version: special administrative measures

reduced from 190 to 139, 26.8% of them have been revised.

● Negative List 2015 Version: applicable to four functional

areas, further shortened to 122 items, effective on May 8th.

A Filing System for Foreign and Outbound Investment

● Sectors outside the negative list enjoy national treatment.

80% newly established companies have been approved

through filing procedures.

● With the filing system, the SHFTZ Administration can

complete the filing procedures within 3 work days. A total of

359 outbound investment projects worth US$10.7 billion have

been realized through the system.

“Single-window” in Market Entry

Capital paid-up system → subscription system Annual inspection system → annual report publication system

Reform of Business Registration System

Single-window, information sharing, parallel administration, and issuance of license by single authority

Quality Inspection: real-time code assignment Tax: online automatic code assignment

Implementing Opening-up Measures

In 2013, 23 opening-up measures from 18 industries in 6 fields of the service sector were rolled out, 779 projects were implemented.

In 2014, 31 opening-up measures (14 service, 14 manufacturing, 2 mining and 1 architecture) were approved, 61 projects were implemented.

In 2015, a new round of opening-up measures in service and manufacturing are expected to be rolled out.

Frontier Opening, Second-tier Effective and Efficient Control, Minimum Supervision within the Zone

Exploring a Categorized Supervision System based on Import Status

Implementing “Single-window” System in Global Trade

Deepening Institutional Innovation in Trade SupervisionBrining Trade Facilitation to a Higher Level

Frontier Opening, Second-tier Effective and Efficient Control, Minimum Supervision within the Zone

23 new measures unveiled by General Administration of Customs (GAC)

23 reform measures from General Administration of Quality Supervision, Inspection and Quarantine (GAQIQ)

15 new measures from China Maritime Safety Administration Integration between GAC and GAQIQ, implementing “Cargo

released upon declaration and inspection” and paperless declaration

Exploring a Categorized Supervision System Based on Import Status

Implementing “Single-window” System in Global Trade

A new regulation model of “categorized supervision + account-divided

management + location management + network supervision + real time

inspection” for bonded, un-bonded and port goods.

Regulation plan and standard operation procedure have been made by GAC

and piloted in 4 logistics companies.

Establishing a cross-sector management and service platform in line with international practices, promoting information sharing, mutual recognition of supervision, mutual assistance in law enforcement between regulatory bodies.

Single window → standardized electronic data→ feedback via single window

Free Trade Account (FTA) Unit Facilitating Investment, Financing & RMB

Convertibility Cross-border Use of RMB Interest Rate Liberalization Foreign Exchange Administrative System

Deepening Innovation in the Financial Sector

to Better Serve the Real Economy

Coordinated Development of Financial Innovations

● 16 Chinese-funded banks, 6 foreign banks have opened

15675 FTAs, a total balance of RMB 373.8 billion.

● Next phase: support the building of SIFC, expand cross–

border use of RMB, deepen reform of forex system, push

forward opening-up in the service sector, improve cross-

border investment and financing environment.

Strengthening of Financial Service Functions

129 licensed financial institutions and more than 3000 financial service companies are present in the zone.

International Energy Exchange Market and International Gold Exchange Market are set up.

129 licensed financial institutions and more than 3000 financial service companies are present in the zone.

International Energy Exchange Market and International Gold Exchange Market are set up.

A Financial Regulation and Risk-control Mechanism

● Regulation coordination and cross-border capital regulation

● Anti-money laundry, anti-terrorism financing, anti-tax evasion

regulation

● Macro-cautious regulation and risk-control mechanism

Reinforcing Mid-event and Ex-post Regulation Innovating Administrative Approaches

● Basic Systems

Social Credit Rating System

Annual Report Publication & List of Abnormal Operation

Information Sharing & Comprehensive Law Enforcement

Involvement of Social Organizations & Market Supervision System

Security Review System

Anti-monopoly Review System

● Professional Regulatory Systems

Social Credit Rating System

Annual Report Publication & List of Abnormal Operation

SHFTZ public credit information platform Comprehensive inquiry service for credit information Ex-ante credit guarantee, mid-event assessment, ex-post

rewards and penalties

On March 1st 2014 Ministry of Industry and Commerce issued the Annual Report Publication & List of Abnormal Operation System.

In 2014, 10477 companies handed in their annual reports, a list of 1467 companies was published for abnormal operation.

Information Sharing & Comprehensive Law Enforcement

Involvement of Social Organizations & Market Supervision System

An information sharing platform that serves as a big data center and information exchange hub was established.

An online law enforcement system was piloted.

Guide the market through institutional design and government purchased services.

Support involvement of industrial associations and professional service institutions in market supervision.

Security Review System

Anti-monopoly Review System

Establish a working mechanism for security review of foreign companies.

Establish an review system targeted at concentration of undertakings, monopoly agreements, and abuse of market ascendency.

Improving the Professional Mid-event and Ex-post Regulatory Systems

Identify regulatory requirements, fulfill regulatory

responsibilities, and establish regulatory systems for

investor requirements, start-up procedures, business

rules, supervision and penalty.

4 laws, 17 administrative regulations and 3 State Council

documents in foreign investment have been suspended.

Regulation for China (Shanghai) Pilot Free Trade Zone was

released, covering administrative reform, investment

opening-up, trade facilitation, financial service, tax

administration, comprehensive regulation, and legal

environment.

Push Forward Reform while Adhering to the Rule of Law

Next Phase of SHFTZ Development

A year and half since establishment, SHTFZ’s reform has begun to yield

results, a series of piloted policies and measures have been rolled out

nationwide. At the end of last year, the State Council decided to

expand SHFTZ for more and greater trials.

We will seize this great opportunity to continue deepening institutional

innovation in the zone, while coordinating with the development of

the Yangtze River Economic Belt and following the “One Belt and One

Road” strategy.

Accelerate Transformation of Government FunctionsAccelerate Transformation of Government Functions

Areas of SHFTZ are all in Pudong, which is convenient to

accelerate transformation of government functions based on

the existing administrative framework, while giving full play to

local resources and advantages.

A List of government powers and responsibilities is the priority

of recent work.

Support Shanghai’s “Four Centers” Initiative & Science and Technology Innovation Center

Support Shanghai’s “Four Centers” Initiative & Science and Technology Innovation Center

Areas in SHFTZ are national development zones and core

functional zones for the building of Shanghai’s “Four Centers”.

Based on specific functions and advantages of each area, SHFTZ

will better shoulder the responsibility of reform in investment,

finance, shipping, trade and technological innovation.

Foster a Business Environment in line with International Practices

Foster a Business Environment in line with International Practices

● Set Rules for a Fair, Open and Transparent Market

Enhance Information DisclosureEnhance Information Disclosure

Create a Level Playing FieldCreate a Level Playing Field

Protect Rights and InterestsProtect Rights and Interests

Enhance Information Disclosure

Voluntarily disclose related policies, rules and regulations, and

procedures

Voluntarily disclose draft of regulatory documents, open to

public criticism, reserve a reasonable time period between policy

release and implementation.

Create a Level Playing Field

Investment and industry access: comb out and lift restrictions on

the private capital.

Environmental protection: strengthen law enforcement, explore EIA

management system, and encourage companies’ application for standard

certifications.

Government purchase: optimize procedure standards, ease access

requirements, improve the management system of government subsidy

programs, and enhance information disclosure of government

procurement projects.

Protect Rights and Interests

IPR Protection: explore a unified administrative and law enforcement

system for patents, trade marks and copyrights; improve a diversified

settlement mechanism; support building Shanghai into an Asia-Pacific IPR

Center.

Dispute Resolution: align with International Commercial Dispute

Resolution Rules; optimize SHFTZ arbitration rules; invite famous

international commercial dispute resolution institutions.

Institutional Innovation for Talent

Concentration of innovative talent

Sino-foreign talent training programs

Facilitation of immigration, visa and residence procedures

Foster a Business Environment in line with International Practices

Foster a Business Environment in line with International Practices

● Reinforce Legal and Taxation Guarantee

Legal Guarantee: revise related laws, rules and regulations, and

State Council documents.

Taxation Guarantee: optimize taxation for investment, trade,

high-end manufacturing and technological innovation; build a tax

system in line with international practices.

Foster a Business Environment in line with International Practices

Foster a Business Environment in line with International Practices

Thank You