Out-Law / Your Daily Need-To-Know

Chinese government plans three new "free trade parks" based on Shanghai model

Out-Law News | 23 Dec 2014 | 10:05 am | 1 min. read

Three new free trade zones (FTZs) offering area-specific economic incentives are to be established in China, the country's state council has announced.

Policies applicable in the new zones, which are described as "free trade parks" in a statement on the state council's websites, will initially be based on those on offer in the existing China (Shanghai) Pilot FTZ. However, they will also be allowed to set additional policies according to local conditions, the state council said.

Sun Yuanxin, a professor at the Shanghai University of Finance and Economics, told state-owned news agency Xinhua that the announcement signalled that "some 70% to 80% of the plans for the three regions will be identical" with those on offer in Shanghai.

Shanghai's FTZ was established as a pilot project in September 2013 with the idea that, if successful, the idea could be replicated elsewhere in China. Within the FTZ, foreign businesses operating in a range of sectors including financial services and technology, media and telecoms (TMT) can operate with fewer regulatory restrictions than currently apply elsewhere in the country.

A 'blacklist' of activities set by the Chinese government prohibits firms from carrying out certain types of business within the FTZ. In the TMT market, activities that firms are not allowed to carry out include investment in stem cell technology development or application; and genetic diagnosis and treatment technology or development. Investment in news agencies, books or newspapers; audio-visual products and electronic publications; production services; cinema infrastructure or operations; and broadcasting is also prohibited or restricted.

The new FTZs will be established in Guangdong province, in southern China; Fujian province, in eastern China; and Tianjin, a northern port city, according to the state council's announcement. Xinhua said that that Guangdong zone would likely focus on customs clearance and financial reforms due to its proximity to Hong Kong and Macao. The Fujian zone would likely have policies promoting trade with Taiwan and the Tianjin zone would focus on financial leasing, according to Xinhua.