Editor's notes:China's State Council issued an overall plan for the new Lingang area of the Shanghai Pilot Free Trade Zone on Tuesday, saying it will support the new area in promoting investment and trade liberalization and facilitation, including the free flow of investment, trade, capital, transportation and employment. In addition, the new area will further simplify the cross-border RMB business process for high-quality enterprises and explore the free flow and exchange of capital. Here're 10 highlights from the plan.
1. The new area will be set up to the south of Dazhi River, east of Jinhui Port, Xiaoyangshan Island and south of Pudong International Airport. According to the principle of "overall planning and step-by-step implementation", a section covering an area of 119.5 square kilometers that includes Nanhui New Town, Lingang Industrial Area, Xiaoyangshan Island and south of Pudong International Airport, will be launched first.
2. The new area will facilitate investment and operation based on fair competition. It will implement a foreign investment security review system, increase openness in key areas such as telecommunications, insurance, securities, scientific research and technical services, education and health, and loosen restrictions on registered capital and investment methods.
At the same time, trade liberalization will be implemented in the new area. It will remove unnecessary trade regulation, licensing and procedural requirements. It will innovate cross-border e-commerce service modes and encourage cross-border e-commerce enterprises to establish an international distribution platform in the new area. In addition, according to the process of oil and gas system reform and industry's needs, the new area will study and grant crude oil import qualifications to qualified enterprises.
3. The new area will implement a cross-border financial management system to facilitate the receipt and payment of funds. It will further simplify the cross-border RMB business process for high-quality enterprises, study and conduct pilot projects on the integration of domestic and foreign currencies in free trade accounts and explore free flows and exchange of capital in the new area.
In addition, qualified financial institutions will be encouraged and supported in providing cross-border financial services, such as cross-border securities investment and cross-border insurance asset management. The new area will carry out preemptive measures to open up the financial industry, actively implement measures such as removing the cap on the proportion of foreign shareholdings in financial institutions and broaden the business scope of foreign financial institutions. It will support qualified foreign investors to establish various financial institutions and ensure Chinese and foreign financial institutions operate equally according to law.
5. The new area will implement free and convenient personnel management. It will loosen restrictions on employment of top talent in modern service industries, and implement more open and convenient policies in areas of entry and exit of personnel and permanent residence of foreign talent.
It will establish a work permit system and talent visa system for foreigners in the new area, which will include granting high-level overseas talents such as research and innovation leaders and teams work permits, or a "green channel" of permanent or long-term residence procedures.
6. The new area will adopt tax systems and policies with international competitiveness. For enterprises in the new area that engage in research and development in key areas such as integrated circuits, artificial intelligence, biomedicine and civil aviation, their enterprise income tax will be levied at a reduced rate of 15 percent within five years from the date of establishment. Policies on the tax differential subsidy of individual income tax for overseas talents will be studied and implemented. In addition, on the premise of not causing tax base erosion and profit transfer, the tax policy arrangement of pilot free trade accounts will be explored.
7. The new area will strengthen supervision in key areas. It will focus on investment, trade, finance, network, ecological environment, cultural security, personnel access, anti-terrorism and anti-secession and public morality, and further improve management measures in foreign investment security review, anti-monopoly review, industry management, user certification and behavior audit.
At the same time, credit classification management will be strengthened in the new area. It will establish an active disclosure system and implement a system of disclosing dishonest lists, market entry bans and withdrawals. It will also improve the revocation system of commercial registration, and the registration authority can revoke the registration according to law if the registration is obtained by deception, bribery or other improper means.
8. The new area will establish frontier industrial clusters with key core technology as the breakthrough point. It will construct an integrated circuit industry base, an artificial intelligence innovation and application demonstration area and a civil aviation industry agglomeration area.
It will develop new international trade, build an Asia-Pacific supply chain management center to attract the gathering of headquarters-based organizations, develop cross-border digital trade and support the establishment of cross-border e-commerce overseas warehouses.
It will build an international medical service cluster, support cooperation with overseas institutions in the development of cross-border medical insurance products and pilot international medical insurance settlement projects. Qualified solely foreign-owned enterprises will be allowed to exhibit, auction and trade cultural and artistic works globally.
10. The new area will strengthen collaborative innovation and development with the Yangtze River Delta. It will support domestic and foreign investors in setting up joint innovation funds in the new area and cooperate on major scientific research projects. Related funds will be allowed to be freely used in the Yangtze River Delta region.
In addition, superior industries in the new area will be supported to expand to the Yangtze River Delta to form industrial clusters.
