Administrative Measures Released for Shanghai Free Trade Zone
By Dezan Shira & Associates
Posted: 31st October 2013 09:15The Shanghai Municipal People’s Government released the “Administrative Measures for the Shanghai Free Trade Zone (hereinafter referred to as the ‘Measures’)” on September 29, which list out the administrative measures for the Shanghai Free Trade Zone (Shanghai FTZ) in the following four areas:
- Investment management;
- Trade development and facilitation;
- Financial innovation and risk management; and
- Comprehensive management and services.
According to the Measures, the main functions of the Shanghai FTZ are as follows:
- Promoting the opening-up of the services industry and investment management system reform;
- Facilitating trade transformation and upgradation;
- Deepening the opening-up of the financial field;
- Innovating the supervision service mode;
- Exploring and establishing an administrative management system in line with international investment and trade rule systems; and
- Cultivating an international and lawful business environment.
The Shanghai government has set up the Shanghai Free Trade Zone Administration Committee to manage and coordinate relevant administrative affairs relating to the zone.
Expanding the Opening-Up of the Service Industry
The Shanghai FTZ will deepen the opening-up level in the following areas:
- Financial services;
- Shipping services;
- Commercial and trade services;
- Professional services;
- Cultural services; and
- Social services.
Negative List Management Mode
The Shanghai FTZ will implement a “Negative List” approach towards foreign investment management. Foreign investment projects in the sectors not covered under the negative list only need to go through record-filing procedures.
Capital Registration System
The Shanghai FTZ will implement a capital registration system. Shareholders of enterprises in the zone shall agree upon the contributing amount, forms and period independently, and record such in the company’s articles of association. The shareholders shall be liable for the authenticity and legality of the capital contribution.
Enterprises in the Shanghai FTZ may commence normal production and operation activities after obtaining the business license. Enterprises engaged in businesses which require administrative approval may file an application with the competent authorities for the approval items after obtaining the business license.
Trade Development and Facilitation
The Shanghai FTZ will encourage multinationals to establish Asia-Pacific headquarters and operating centers with trade, logistics and settlement functions in the zone.
Moreover, the Shanghai FTZ will facilitate the transformation and upgradation of the following businesses:
- International trade;
- Warehousing and logistics; and
- Processing and manufacturing.
- In addition, the Shanghai FTZ will promote the development of the following new types of trade businesses:
- Offshore business;
- International trade settlement;
- International bulk commodities transactions;
- inancial leasing;
- Bonded delivery of futures; and
- Cross-border e-commerce.
The Shanghai FTZ will also facilitate the development of the following shipping businesses:
- International shipping;
- International ship management;
- International crew management;
- International shipping brokerage; and
- Shipping price index derivatives trading business.
The Shanghai FTZ will innovate the financial system and establish a coordinated system between the financial reform innovation and construction of an international financial center.
RMB Convertibility under Capital Account
Under a controllable risk level, the Shanghai FTZ will implement a trial program of RMB convertibility under the capital account, and innovate business and management modes through separate accounting.
Interest Rate Liberalization
The Shanghai FTZ will cultivate an independent pricing mechanism in line with the development of the real economy, and gradually promote the reform of interest rate liberalization.
RMB Cross-border Usage
Enterprises in the Shanghai FTZ may innovate cross-border RMB businesses based on their actual situation, thereby to facilitate the cross-border usage of RMB.
Foreign Exchange Management
The Shanghai FTZ will set up a foreign exchange management system to facilitate trade investment.
Comprehensive Management and Services
Intellectual Property Protection
The Shanghai FTZ will strengthen intellectual property protection and encourage professional institutions to provide intellectual property protection and mediation services in the zone.
Commercial Dispute Settlement
For handling of commercial disputes, enterprises in the Shanghai FTZ may bring a lawsuit to the people’s court or apply for arbitration or commercial meditation based on mutual agreements.
This article was first published on China Briefing.
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