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Shanghai Free Trade Zone Overview

Updated:2018-7-11 18:13:01    Source:www.tannet-group.comViews:441

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A free trade zone (FTZ) is a specific class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and re-exported under specific customs regulation and generally not subject to customs duty. The establishment of Shanghai Free Trade Zone (SHFTZ) is major decision made by the Central Committee of the Communist Party of China in response to new challenges posed by the new situation. It is envisioned to explore new paths and accumulate good experience for all-round reform and opening-up.

Officially launched on Sept. 29th 2013, SHFTZ designed a four-pronged institutional innovation strategy targeted at investment management, trade facilitation, financial services and transformation of government functions. SHFTZ covers an area of 28.78 km2, composed of four customs supervision areas: Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong International Airport Free Trade Zone.

SHFTZ was the very first to act in many groundbreaking projects. It is writing a new chapter for China's opening-up and embarking on a new path for the China’s open economy.

Brief Interoduction to Shanghai Free Trade Zone
The State Council approved the establishment of China (Shanghai) Pilot Free Trade Zone on August 2013 and the FTZ was officially launched on September 29 of the same year by merging four bonded areas under the special administration of Shanghai Customs, namely Waigaoqiao Free Trade Zone, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area, and Pudong Airport Free Trade Zone. The 28.78-square-kilometer FTZ is China’s experiment field to test policies for government reform, financial reform, business innovation, foreign investment and tax reform. It also allows Shanghai to vigorously develop re-export trade and offshore businesses.

Shanghai FTZ had registered 23,243 companies by the end of 2014, 14,860 of them newly registered and 2,342 foreign-funded. They generated 16 trillion yuan (US$2.6 trillion) in business revenue in 2014, up 11 percent from the year before. Product sales rose 11.5 percent to 13.8 trillion yuan; earnings of shipping and logistics companies grew 15 percent to 118 billion yuan. Foreign trade totaled 762.3 billion yuan, an increase of 8.3 percent.

Corporate Establishment
The zone cancels out a number of financial requirements for setting up a company in China, including the minimum registration capital of RMB30,000 for limited liability companies, the RMB100,000 minimum for single shareholder companies, and the RMB5 million minimum for joint stock companies. Moreover, under the FTZ's new capital registration system, foreign investors are no longer required to contribute 15-percent capital within three months and full capital within two years of the establishment of a foreign invested enterprise (FIE).

Instead, shareholders of companies established in the zone may agree upon the contribution amount, form, and period of contribution at their own discretion. However, shareholders are still liable for the authenticity and legality of capital contributions and will be held accountable to the company within the limits of their respective subscribed capital or shares.

In addition to these financial reforms, the FTZ also introduces a simplified procedure for foreign investors to establish a company in China. The "one-stop application processing platform" unique to the zone requires that all application materials be submitted to and handled by the Industry and Commerce Authority (AIC) in the zone. The relevant approval and filing procedures are then conducted via inter-departmental circulation, after which the various licenses and certificates (including the business license, enterprise code certificate, and tax registration certificate) are issued to the applicant(s) by the AIC.

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