Notice by the State Council of Issuing the Framework Plan for the New Lingang Area of China (Shanghai) Pilot Free Trade Zone

Below you can find the translated English version of the Notice by the State Council of Issuing the Framework Plan for the New Lingang Area of China (Shanghai) Pilot Free Trade Zone issued by the State Council on July 27th, 2019.

The establishment of the new Lingang area of China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “New Area”) is a major strategic arrangement for further opening made by the CPC Central Committee with Comrade Xi Jinping as the core taking into account the big picture, through scientific decision-making, and an important measure to show China’s clear-cut resolve to adhere to all-around opening and actively lead sound economic globalization. This Plan is developed for the purposes of thoroughly implementing the spirit of the important speech by General Secretary Xi Jinping during the first China International Import Expo and advancing high-level opening in a deeper layer, in a broader field, with greater efforts.

Table of Contents

General Requirements 

1. Guiding ideology. Xi Jinping Thought on Socialism with Chinese Characteristics in a New Era shall be the guidance, the spirit of the 19th CPC National Congress and the Second and Third Plenary Sessions of the 19th CPC Central Committee shall be fully implemented, the new development concept shall be adhered to, high-quality development shall be adhered to, the transformation of the quality, efficiency and impetus of economic development shall be promoted, the most competitive free trade parks recognized internationally shall be benchmarked, key fields needed for national strategies, munch in demand in the international market, imposing strict requirements on opening, for which other regions have no implementation conditions, shall be selected to implement opening policies and systems relatively competitive in the international market, the risk stress test for the open economy shall be strengthened, investment and operational facilitation, free movement of goods, capital flow facilitation, highly opened transportation, free practice of persons, and easy and mutual accessibility of information between the New Area and overseas regions shall be achieved, and a special economic function zone influential and competitive in the international market shall be built, so as to voluntarily serve and integrate into major national strategies and better serve the overall strategic arrangement for opening.

2. Development objectives. By 2025, a relatively mature framework of liberalization and facilitation systems for investment and trade will have been established, a group of more opened functional platforms will have been built, a group of world-class enterprises will have been gathered, regional creativity and competitiveness will have been significantly enhanced, and economic strength and gross domestic product will have significantly soared. By 2035, a special economic function zone enormously influential and competitive in the international market will have been built, more mature and shaped systems will have been formed, the core functions for allocation of global high-end resource factors will have been built, and an important vehicle for China to deeply integrate into economic globalization will have been established.

3. Planned scope. A New Area shall be established to the south of Dazhi River in Shanghai, to the east of Jinhuigang, in Xiaoyangshan Island and to the south of Pudong International Airport. In accordance with the principle of “overall planning and step-by-step implementation,” Nanhui New City, Lingang Equipment Industry Zone, Xiaoyangshan Island, the southern part of Pudong International Airport, and other areas shall be launched first, covering 119.5 square kilometers.
The development and utilization of the New Area shall comply with the laws and regulations on land, utilization of uninhabited island, ecology and environment, and urban and rural planning and relevant requirements for the conservation and intensive utilization of resources; and the application for reasonable and necessary use of the sea in accordance with the relevant national regulations and procedures shall be supported.

Establishing a framework of systems with investment and trade liberalization as the core

On the basis of the application of all opening and innovation measures for pilot free trade zones, the New Area shall be supported in advancing the liberalization and facilitation of investment and trade with a focus on investment freedom, trade freedom, capital freedom, transportation freedom, employment freedom, and the like.

4. Implementing investment and operating facilitation for fair competition. Drawing on the common practice of international free trade parks, the foreign investment security review system shall be implemented, efforts to open telecommunications, insurance, securities, scientific research, technical services, education, health, and other key fields shall be increased, and restrictions on registered capital and investment methods, among others, shall be relaxed, so as to promote fair competition among various market participants. The trial implementation of the registration confirmation system for businesses shall be explored, the civil rights of market participants shall be respected, and formality examination of documents submitted by applicants shall be conducted. The reform of “separating permits from business license” shall be implemented in depth. The New Area shall be supported in strengthening the construction of adjudicative organizations in relation to international commercial disputes. Well-known overseas arbitral and dispute resolution institutions shall be allowed to establish business divisions in the New Area, as registered with the justice department of the Shanghai Municipal People’s Government and filed with the justice department of the State Council, to conduct arbitral business with respect to civil and commercial disputes arising in international commerce, maritime, investment, and other fields, so as to legally support and guarantee Chinese and foreign parties’ application for and enforcement of temporary measures such as property preservation, evidence preservation and conduct preservation before and during arbitration.

5. Implementing high-standard trade liberalization. An part in the New Area shall be physically fenced to establish the Yangshan Special Comprehensive Bonded Zone as an important vehicle benchmarking internationally recognized and most competitive free trade zones, and on the basis of fully implementing the comprehensive bonded zone policy, unnecessary supervisory, licensing and procedural requirements for trade shall be removed to implement higher-level policies and systems for trade liberalization and facilitation. For overseas goods arriving in or leaving the physically fenced part, the implementation of a supervisory mode that focuses on safety supervision and reflects a higher level of trade liberalization and facilitation shall be explored, so as to improve the efficiency of port supervisory services and enhance the functions of the international transit and consolidation hub. The New Area shall be supported in developing key industries with international competitiveness and vigorously exploring an appropriate customs supervisory system according to the business characteristics of enterprises. Relevant supervisory policies and systems shall be separately developed under the leadership of the General Administration of Customs. The liberalization of trade in services shall be advanced, the development of capital- and technology-intensive trade in services such as cultural services, technical products, information and communications, and medical care and health shall be accelerated, the mode of cross-border e-commerce services shall be innovated, and cross-border e-commerce enterprises shall be encouraged to establish international distribution platforms in the New Area. According to the process of the oil and gas system reform and industry needs, the qualification of eligible enterprises for import of crude oil in the New Area shall be researched.

6. Implementing a cross-border financial management system that facilitates receipts and payments. Under the premise of risk controllability, in accordance with the laws and regulations, drawing on internationally accepted financial regulatory rules, the procedure for high-quality enterprises to conduct cross-border RMB business shall be further simplified, so at to promote facilitation of cross-border financial services. The launch of a pilot program of the integrated domestic and foreign currency functions of free trade accounts shall be researched, and the free inflow and outflow of capital and free exchange in the New Area shall be explored. Enterprises in the New Area shall be supported in conducting cross-border financial activities in accordance with internationally accepted rules and the laws and regulations, and financial institutions shall be supported in providing enterprises and non-residents in the New Area with cross-border financial services such as cross-border bond issuance, cross-border investment and mergers and acquisitions, and cross-border centralized capital management, on the premise of compliance with the laws and regulations, risk controllability, and commercial sustainability. The funds raised overseas by enterprises in the New Area and the funds raised overseas and revenue from cross-border services acquired by eligible financial institutions may be used independently for operating investment activities in the New Area and overseas. Eligible financial institutions shall be supported in conducting cross-border securities investment, cross-border insurance asset management, and other business. In accordance with the principles of overall national planning, serving entities, risk controllability, and step-by-step advancement, capital account convertibility shall be steadily advanced. Measures for opening the financial industry shall be pioneered, measures such as relaxing control over the proportion of foreign ownership in financial institutions and broadening the scope of business for foreign-funded financial institutions shall be vigorously implemented, eligible foreign investors shall be supported in establishing various financial institutions in accordance with the law, and it shall be ensured that Chinese-funded and foreign-funded financial institutions operate on an equal footing with each other in accordance with the law. As authorized by the national financial administration authorities, the means of science and technology shall be used to improve financial service level and regulatory capabilities, and unified and efficient financial management systems and mechanisms shall be established, so as to effectively prevent financial risks.

7. Implementing highly open international transportation management. The function of the global pivot port shall be improved, exploration in coastal piggyback, international ship registration, international freedoms of the air, and other aspects shall be strengthened, so as to improve the ability to gather and allocate international routes and cargo resources. The statutory inspection of ships shall be gradually relaxed. Under the premise of ensuring effective supervision and risk controllability, a domestically manufactured ship registered in the Yangshan Port of China to engage in international transportation shall be treated as an export, with respect to which an export tax refund shall be given. Policies relating to tax refund at the port of departure shall be further improved, supervisory procedure shall be optimized, the implementation effect of the coastal piggyback policy for Chinese-funded ships flying flags of convenience shall be amplified, and it shall be researched to allow foreign ships on an international voyage to conduct the coastal piggyback business with respect to containers in foreign trade with Yangshan Port as the international transit port under the principle of reciprocity. Pudong International Airport shall be promoted in expanding arrangements for freedoms of the air including the fifth freedom with countries and regions along the “Belt and Road” and attract airlines from relevant countries and regions to open air routes with a layover. Pudong International Airport shall be supported in exploring air transit and consolidation business. With Yangshan Port, Pudong International Airport and Luchaogang Railway Container Central Station as the vehicles, the sharing of information on sea, air and rail transportation shall be promoted to improve the operational efficiency of multimodal transport.

8. Implementing free and facilitative personnel management. Restrictions on employment of high-end talents in the modern service sector shall be relaxed, and more open and facilitative policies and measures in aspects such as cross-border movement of persons and permanent residence of foreign talents shall be implemented. A work permit system and a talent visa system for foreigners in the New Area shall be established. Professionals vocationally qualified in fields such as finance, construction, planning, and design shall be allowed to provide services in the New Area upon filing, and their work experience overseas may be treated as being domestic. Unless national sovereignty or security is related, foreigners shall be allowed to apply for sitting relevant vocational qualification examinations in the New Area. The launch and strengthening of technical cooperation in technologically sophisticated fields such as judicial forensic toxicology and judicial appraisal of environmental damage shall be explored. More facilitative visa, stay and residence policies and measures shall be provided for foreigners who are engaged in commerce, exchange, visit and other economic and trade activities in the New Area. Policies on and measures for the administration of introduction of overseas talents shall be developed and improved, and a “green passage” for instituting procedures for work permit and permanent or long-term residence shall be provided for overseas high-level talents such as leading research and innovation talents and teams. The implementation of the quota administration system for foreigners shall be explored, and more facilitative services shall be provided for foreign talents urgently needed by enterprises registered in the New Area.

9. Implementing the orderly and secure cross-border flow of data on the international Internet. Sound international communication facilities shall be built, the construction of 5G, IPv6, cloud computing, Internet of Things, Internet of Vehicles, and other next-generation information infrastructure shall be accelerated, the broadband network access capabilities and the quality and application level of network services in the New Area shall be improved, and a safe and facilitative channel exclusively for data on the international Internet shall be established. The New Areas shall be supported in focusing on key fields such as integrated circuits, artificial intelligence, biomedicine, and headquarters economy, conducting the security assessment of cross-border flow of data on a pilot-program basis, and establishing certification of data protection capabilities, review of data circulation and backup, cross-border data circulation, trading risk assessment, and other data security management mechanisms. A pilot program of international cooperation rules shall be launched, efforts to protect patents, copyrights, enterprises’ trade secrets, and other rights and data shall be intensified, and exchanges and cooperation in leading the global digital economy shall be voluntarily joined.

10. Implementing tax systems and policies with international competitiveness. A special tax policy shall be implemented for overseas goods entering the physically fenced part and trade in goods and services between enterprises within the physically fenced part. The scope of application of the value-added tax (“VAT”) policy for service exports in the New Area shall be expanded, and a tax policy in the New Area suitable for development of overseas investment and offshore business shall be researched. For eligible enterprises in the New Area involved in the core links of production, research and development in key fields such as integrated circuits, artificial intelligence, biomedicine, and civil aviation, enterprise income tax shall be levied at a reduced rate of 15% for five years from the date of establishment. The implementation of a subsidy policy for difference between incidences of individual income tax on overseas talents shall be researched. A pilot program of tax policy arrangements for free trade accounts shall be explored without causing tax base erosion and profit transfer.

Establishing a comprehensive risk management system

With risk prevention and control as the bottom line, based on classification regulation, coordinated regulation and intelligent regulation, the level of risk prevention and safety regulation shall be comprehensively improved.

11. Strengthening regulation in key fields. An integrated information management service platform covering the New Area’s administrative authority, industry authorities, and enterprises and related operating entities in the New Area shall be established. With a focus on key fields such as investment, trade, finance, networks, ecology and environment, cultural security, entry and exit of persons, combat against terrorism and secession, and public ethics, measures for the administration of security review of foreign investment, anti-monopoly review, industry management, user authentication, and behavior audit, among others, shall be further improved, the application of information technology in judgment, prevention and control of risks shall be strengthened, and a joint prevention and control mechanism shall be established, so as to implement strict, precise, and effective regulation. A precise risk monitoring mechanism for special fields such as quarantine, places of origin, intellectual property, international conventions, and cross-border capital shall be established to achieve real-time monitoring and dynamic early warning management of risks in the entire process.

12. Strengthening credit rating management. The basic rules and standards for credit evaluation shall be improved, the suitability management of businesses shall be implemented, and credit ratings shall be an important basis for enterprises to enjoy preferential policies and system facilitation in accordance with the principle of “compliance facilitation.” A voluntary disclosure system shall be established, and disclosure of dishonesty lists and market access ban and exit systems shall be implemented. The business registration revocation system shall be improved, and if registration is obtained by fraud, bribery or otherwise illicit means, the registration authorities may revoke the registration according to the law.

13. Strengthening border security. Intelligent regulatory infrastructure shall be established by high standards, and mutual accessibility, mutual recognition, and sharing of regulatory information shall be achieved. The “first-line” border security and “second-line” economic and social security shall be protected. The inbound security management shall be strengthened, and a “two-stage access” regulatory mode for inbound goods in the New Area shall be implemented. For material emergencies and risks difficult to control after release such as restricted and controlled articles (such as nuclear, biological, chemical, detonating, and explosive articles and drugs), major epidemics, and high-risk commodity safety, or as clearly required by the laws or administrative regulations, the “permitted entry” regulation shall be implemented according to the law. For other risks such as non-high-risk commodity inspection and risk-controllable quarantine, the “eligibility-based marketing” regulation shall be implemented.

Building an open industry system competitive in the international market

The advantage of the open framework of systems shall be exerted, the gathering of functions such as coordinating international business, cross-border financial services, research and development of cutting-edge technology, and cross-border trade in services shall be promoted, and the gathering function of the open economy shall be enhanced. The transformation and upgrading of existing enterprises shall be accelerated to improve the overall capacity and level of regional industries.

14. Establishing a cluster of cutting-edge industries with key and core technologies as breakthroughs. A comprehensive industry base for integrated circuits shall be built, the regulatory mode for bonded material and part imports in the whole process shall be optimized, multinational companies shall be supported in establishing offshore research, development and manufacturing centers, and the development of key fields such as core chips, unique processes, key equipment, and basic materials shall be promoted. Artificial intelligence innovation and application demonstration zones shall be built, the opening of application scenarios shall be accelerated, and the development of new industries and forms of business such as smart vehicles, manufacturing, and robots shall be promoted. A clustering area of the civil aviation industry shall be built, with large passenger aircrafts and civil aircraft engines as the core, the gathering of basic research, technology development, product development, test and verification, and other supporting industries shall be accelerated, and the development of the whole aviation industry chain covering assembly and delivery, production ancillaries, operation and maintenance, cultural and travel services, and the like shall be promoted. A maintenance and green remanufacturing center oriented to countries and regions along the “Belt and Road” shall be built, a green certification and rating system shall be established, the maintenance and remanufacturing of inbound products such as numerically-controlled machine tools and engineering equipment in the comprehensive bonded zone shall be supported, and the international competitiveness of the high-end intelligent remanufacturing industry shall be enhanced.

15. Developing new types of international trade. An Asia-Pacific supply chain management center shall be built, the systematic framework of system support for new types of international trade and investment and financing services in the international market shall be improved, and headquarters shall be attracted to gather. Cross-border digital trade shall be developed, and the establishment of overseas warehouses for cross-border e-commerce shall be supported. An international medical service clustering area shall be built, and the development of cross-border medical insurance products and the launch of the pilot program of international medical insurance settlement in cooperation with overseas institutions shall be supported. Eligible wholly foreign-funded enterprises shall be allowed to conduct cultural and art exhibitions, auctions and trades oriented to the whole world.

16. Building a global shipping hub of high capacity at a high level. Pudong International Airport shall be supported in building a world-class aviation hub, building an air cargo terminal integrating logistics, sorting and regulatory functions, and constructing a regional aviation headquarters base and an international hub for air express shipments. The full implementation of through-combined transport of international passengers and their baggage shall be advanced. An international shipping supply service system shall be established, and the comprehensive service capabilities such as ship and aviation supplies, maintenance, spare parts, and fuel oil shall be enhanced. Chinese-funded and foreign-funded enterprises and institutions shall be supported in providing shipping financing, shipping insurance, shipping settlement, leasing of aviation supplies, ship trading, shipping arbitration, and other services, exploring the development of shipping index derivatives business, and improving high-end shipping service functions.

17. Expanding cross-border financial service functions. The RMB cross-border financial service capabilities shall be vigorously enhanced, and the depth and breadth of RMB cross-border financial services shall be expanded. The conduct of RMB cross-border trade financing and refinancing business shall be supported. Multinational companies shall be encouraged to establish global or regional capital management centers. The development of finance lease business in relation to aircrafts, ships, and the like shall be accelerated, and the development of green financial business such as environmental pollution liability insurance shall be encouraged.

18. Promoting the integration of industries and the city. Channels for fine international capital and experience to enter public service fields such as education, medical care, culture, sports, park construction, and urban management shall be further expanded, the management of various infrastructure construction in the New Area shall be strengthened, and high-quality and international urban service functions shall be enhanced.

19. Strengthening coordinated and innovative development with the Yangtze River Delta. Domestic and foreign investors shall be supported in establishing special funds for joint innovation in the New Area and cooperating in major scientific research projects, and relevant funds shall be allowed to be freely used in the Yangtze River Delta region. Privately-offered funds promoted overseas by domestic investors shall be supported in participating in the financing of innovative technology enterprises in the New Area, and if eligible, may invest in the Yangtze River Delta region. The advantageous industries in the New Area shall be supported in expanding into the Yangtze River Delta region and becoming an industry cluster.

Accelerating the advancement of implementation

The New Area shall be managed as if it were a special economic zone. Relevant state agencies and Shanghai Municipality shall, as required by the Framework Plan, strengthen the building of the rule of law and the prevention and control of risks, conscientiously safeguard national security and social security, and solidly advance the implementation of all tasks of reform pilot programs.

20. Strengthening Party leadership. The “consciousness of the need to maintain political integrity, think in big-picture terms, follow the leadership core, and keep in alignment” shall be heightened, the “confidence in the path, theory, system, and culture of socialism with Chinese characteristics” shall be boosted, “defending the status of General Secretary Xi Jinping as the core of the CPC Central Committee and the whole Party and the authority and centralized and unified leadership of the CPC Central Committee” shall be achieved, the core socialist values shall be cultivated and practiced, and Party construction shall always underpin the planning and construction of the New Area throughout, so as to translate the political and organizational advantages of the Party into strong guarantees for the New Area to comprehensively deepen the reform and expand opening.

21. Increasing empowerment efforts. The New Area will be given higher authority over independent development, reform and innovative management, and under the premise of risk controllability, the administrative authority of the New Area shall be authorized to independently conduct innovative business close to the market. Any reform and opening measure in the New Area relating to adjustments to a law or administrative regulation in force shall be implemented with the unified authority of the National People Congress or the State Council by the statutory procedures.

22. Driving a new round of reform and opening in the Yangtze River Delta. The experience of the New Area in systems in investment management, trade regulation, financial opening, flow of talents, transportation management, risk management and control, and other aspects shall be regularly summarized and assessed, a promotion list shall be developed, the scope of promotion and regulatory requirements shall be specified, and promotion shall be implemented in an orderly manner with approval obtained by procedure. The interaction between the New Area on one side and areas under special customs supervision and economic and technological development zones on the other side shall be strengthened to amplify ripple effects.

23. Organizing implementation without delay. Relevant state agencies shall further decentralize power to Shanghai Municipality and the departments of the central authorities in Shanghai and support and guide the formulation of relevant detailed rules for implementation in accordance with the Framework Plan.
Shanghai Municipality shall effectively fulfill its primary responsibilities, build the New Area by high standards in a high-quality manner, accelerate the formation of a mature and established framework of systems and administrative system, and better stimulate the vitality of market participants in participating in the international market. Any material matter shall be promptly reported to the CPC Central Committee and the State Council for instructions.

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