Notice of the State Council on Printing and Distributing the Overall Plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone

 

(No. 15 [2019])

 

 

 

The people’s governments of all provinces, autonomous regions and municipalities directly under the Central Government, all ministries and commissions of and departments directly under the State Council,

 

The Overall Plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone, approved by the State Council, is hereby printed and distributed to you for earnest compliance.

 

The State Council

July 27, 2019

 

 

 

 

 

 

 

Overall Plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone

 

 

The establishment of Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as Lin-gang Special Area) represents a major strategic and well-conceived decision made by the CPC Central Committee with President Xin Jinping at its core for further opening-up in light of the general situation. It is also an important step to demonstrate China’s clear stand for all-round opening-up in the new era and its active role in guiding the healthy development of economic globalization. To fully implement the guiding principles of the speech delivered by President Xi Jinping at the first China International Import Expo and to promote all-round opening-up on a higher level and with greater efforts in wider fields, the Overall Plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the Overall Plan) is formulated.

 

1. General Requirements

 

1) Guiding Principles

Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone will follow the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era and fully implement the guiding principles of the 19th CPC National Congress and the second and third plenary sessions of its 19th Central Committee and adhere to the new concept of development and high-quality development to promote the reform of quality, efficiency and momentum of economic development. Benchmarked against free trade zones which are recognized as the most competitive ones in the world, Lin-gang Special Area will focus on the fields that with huge demands in the global market, high requirements for openness, and in consistent with the national strategies, and other areas fail to introduce due to present conditions. Lin-gang Special Area will introduce opening-up policies and systems which are competitive in the global market, and intensified risk and pressure tests for an open economy. Between the Special Area and overseas market, there will be facilitated investment and operation, free import and export of goods, easier flow of funds, open transportation, employment liberalization, and convenient access to information, all of which will make the Special Area a special economic functional zone more influential and competitive in the global market, allowing it to better serve and integrate to major national strategies and contribute to the overall strategic arrangement of opening-up.

 

2) Development Goals

By 2025, Lin-gang Special Area will have established a relatively mature institutional system featuring the liberalization and facilitation of investment and trade, set up functional platforms with high openness, and enabled the area to become a business cluster for world-class enterprises. The innovation and competitiveness of Lin-gang Special Area will have been improved, and the economic strength and aggregate surged. By 2035, Lin-gang Special Area will have been constructed into a special economic functional zone with strong global market influence and competitiveness, fostered more mature institutions, built the core function to allocate the worldwide high-end resources, and become an important platform for the country to integrate into economic globalization.

 

3) Scope of the Special Area

Lin-gang Special Area covers the area south to Dazhi River and east to Jinhui Stream, Xiaoyangshan Island and southern part of Shanghai Pudong International Airport. Under the principle of “overall planning and step-by-step implementation,” the start-up area covers 119.5 km2, including Nanhui New City, Lin-gang Equipment Industrial Zone, Xiaoyangshan Island, and southern part of Shanghai Pudong International Airport.

The development of the Special Area should abide by laws and regulations concerning land, non-residential island, ecological environment, and urban and rural planning, as well as the relevant requirements for the conservation and intensive use of resources. The Special Area will use the sea resource in accordance with the national laws and procedures.

 

2. Establishing an Institutional System with Investment and Trade Liberalization at its Core

Based on the opening-up and innovation measures implemented in Shanghai Pilot Free Trade Zone, Lin-gang Special Area will be supported in promoting liberalization and facilitation of investment and trade, focusing on the freedom of investment, trade, capital, transportation and employment.

 

1) Investment and Operation Facilitation Based on Fair Competition

Referring to the common practice of international free trade zones, Lin-gang Special Area will implement a foreign investment security review system, intensify opening-up in key areas such as telecommunication, insurance, security, scientific research and technical service, education, and health, and ease the restrictions on registered capital and investment methods to promote fair competition among various market subjects. Lin-gang Special Area will explore the trial registration system for commercial entities, respect the civil rights of market entities and conduct formal examinations on documents submitted by the applicants in order to fully implement the reform separating permits from the business license. Lin-gang Special Area will construct tribunals to resolve international commercial disputes and allow well-known foreign arbitration agencies and dispute settlement organizations to set business offices or branches in Lin-gang Special Area after registering in the judicial administrative department of the Shanghai Municipal Government and reporting to the judicial administrative department of the State Council for record. The offices or branches mentioned hereinabove are set to conduct arbitration on the civil and commercial disputes arising in the fields of international trade, maritime affairs, investment, etc., and to support and guarantee the application and enforcement of interim measures such as property preservation, evidence preservation, and action preservation by Chinese and foreign parties before and during the arbitration in accordance with the law.

 

2) High-standards Trade Liberalization

Lin-gang Special Area will establish a physical fence zone and construct the Yangshan Special Comprehensive Free Trade Zone as a primary carrier to catch the most recognized and competitive free trade zones in the world. Lin-gang Special Area will fully implement preferential policies of the China (Shanghai) Pilot Free Trade Zone, abolish unnecessary trade supervision, licensing and procedural requirements, and carry out the policies and institutions ensuring trade liberalization and facilitation. For the goods departing from and arriving at the physical fence zone, Lin-gang Special Area will explore and implement a supervision model mainly focusing on security supervision and reflecting a higher level of trade liberalization and facilitation to improve the efficiency of port supervision services and intensify the role as international transit hub. Lin-gang Special Area will be supported in developing key industries with global competitiveness and actively explore appropriate customs supervision systems in accordance with the business of enterprises. The relevant regulatory policies shall be formulated under the leadership of General Administration of Customs. Lin-gang Special Area will promote the liberalization of trades in service, accelerate the development of capital-technology-intensive trades in service such as cultural services, technological products, information and communication, and medical and health services, explore cross-border e-commerce service models, and encourage cross-border e-commerce companies to establish international distribution platforms in the Special Area. According to the reform process of oil and gas system and industrial needs, eligible enterprises will be granted with the qualifications for crude oil import in the Special Area. 

 

3) Cross-border Financial Administration System Featuring Payment Convenience

On the premise that risks are under control, Lin-gang Special Area will, in accordance with laws and regulations, take the international recognized financial supervision rules as examples to further simplify the procedures of cross-border RMB business of high-quality enterprises to facilitate the cross-border financial services. Lin-gang Special Area will conduct pilot projects of integration of local and foreign currencies in free trade accounts and explore free capital inflow, outflow and exchange in the Special Area. Lin-gang Special Area will support the enterprises in the Special Area to carry out cross-border financial activities in compliance with international prevailing rules and regulations, and encourage financial institutions to provide cross-border services such as bond issuance, investment mergers and acquisitions, and centralized operation of funds to enterprises and non-residents in the Special Area on the premise of legal compliance, risks under control and sustainable business. The funds raised abroad by enterprises in the Special Area, the funds raised abroad and the income obtained from cross-border services by qualified financial institutions can be used independently for business and investment activities in Lin-gang Special Area and elsewhere abroad. Lin-gang Special Area will also support eligible financial institutions in conducting cross-border security investment, cross-border insurance asset management and other businesses. In accordance with the principles of overall national plan, serving entities, risks under control, and step-by-step progress, Lin-gang Special Area will advance capital account convertibility gradually. Lin-gang Special Area will be the first to try opening-up measures in financial industry, actively implement measures such as relaxing the proportion of foreign shareholdings in financial institutions and expanding the business scope of foreign financial institutions, support qualified foreign investors to establish financial institutions in accordance with laws, and ensure that Chinese and foreign financial institutions operate equally according to laws. Authorized by the state financial management department, Lin-gang Special Area will use scientific and technological means to improve the level of financial services and regulatory capabilities, establish an efficient financial management mechanism, and effectively prevent financial risks.

 

4) Highly Open International Transportation Administration

Lin-gang Special Area will enhance its role as the global hub port, strengthen exploration in coastal transportation, international ship registration, and opening of international navigation rights, and improve the ability to gather and allocate international routes and cargo resources. The statutory inspection of ships shall be gradually released. On the premise of ensuring effective supervision and risk under control, Lin-gang Special Area will treat the domestic manufacturing ships registered for international transportation in Yangshan Port of China as doing export business and grant export tax rebates. Lin-gang Special Area will further improve the port of departure tax rebate policies, optimize the supervision process, expand the implementation effect of the coastal container transshipment policies for the Chinese-funded flag of convenience ships, and study the possibility of foreign-funded vessels to do coastal container transshipment business with Yangshan Port as the international transit port under the principle of reciprocity. Lin-gang Special Area will promote the expansion air rights arrangements, including the fifth freedom rights, between Shanghai Pudong International Airport and the countries and regions along the “Belt and Road” to attract airlines of these countries and regions to open stop routes and support Shanghai Pudong International Airport to explore the air transit business. With Yangshan Deepwater Port, Shanghai Pudong International Airport and Luchao Port Railway Container Center Station as carriers, Lin-gang Special Area will promote the sharing of the information on maritime, air and rail transportation to improve the operational efficiency of multi-model transport.

 

5) Free and Convenient Personnel Administration

Lin-gang Special Area will relax the restrictions on the employment of high-end talents in modern service industries and implement more open and convenient policies and measures in terms of personnel entry and exit and permanent residence of foreign talents. Lin-gang Special Area will establish a work permit system and a talent visa system for foreigners who work in the Special Area. Qualified professionals of finance, construction, planning, design and other fields with overseas vocational qualifications are allowed to provide services in the Special Area after recording. Their overseas experience can be regarded as domestic working experience. Except examinations involving national sovereignty and security, foreigners are allowed to attend qualification examinations in the Special Area. Lin-gang Special Area will strengthen technical cooperation in areas with high technological content such as forensic toxicological judicial expertise and environmental damage judicial expertise. Lin-gang Special Area will provide more convenient visas and residence policies and measures for foreigners who engaged in business, exchanges, visits, and other economic and trade activities in the Special Area. Lin-gang Special Area will formulate and improve introduction policies and management methods for foreign talents, and provide “green channels” for the work permit and permanent or long-term residence procedures for high-level foreign talents and their team working in the fields of research and innovation. Lin-gang Special Area will also explore and implement the quota management system for foreigners and provide more convenient services for foreign talents that urgently needed by registered enterprises in the Special Area.

 

6) Orderly and Secure Cross-border Flow of Internet Data 

Lin-gang Special Area will construct complete international communication facilities, accelerate the construction of next-generation information infrastructures such as 5G, IPv6, cloud computing, Internet of Things, and Vehicle Networking, and improve the broadband access capabilities, network service quality and application level in the Special Area to build safe and convenient Internet data special channels. The Special Area will focus on key areas such as integrated circuits, artificial intelligence, biomedicine, headquarters economy, etc., to conduct a pilot security assessment of cross-border data flows and establish data security management mechanisms such as data protection ability authentication, data circulation backup review, cross-border data circulation, and transaction risk assessment. Lin-gang Special Area will pilot international cooperation rules, strengthen the protection of rights (such as patents, copyrights, and business secrets, etc.) and data, and participate in and lead global digital economic exchanges and cooperation actively.

 

7) Tax Regime and Policies with International Competitiveness

Special tax policies will be implemented for goods entering the physical fence zone from abroad and for goods trading and services among enterprises within the physical fence zone. Lin-gang Special Area will expand the application scope of VAT policy for service export, and seek for new tax policy suitable for the development of foreign investment and offshore business. Enterprises in the Special Area that meet the requirements and are engaged in the research and development of core projects in key areas such as integrated circuits, artificial intelligence, biomedicine, and civil aviation will be levied enterprise income tax at a reduced rate of 15% within five years from the date of establishment. Lin-gang Special Area will study and implement the subsidy policy of individual income tax burden difference for foreign talents, and explore the tax policy for pilot free trade accounts without causing tax base erosion and profit transfer.

 

3. Establishing a Comprehensive Risk Management System

Lin-gang Special Area will take the risk prevention and control as the bottom line, and comprehensively improve the level of risk prevention and security supervision based on classified supervision, collaborative supervision, and intelligent supervision.

 

1) Strengthening Supervision in Key Areas

Lin-gang Special Area will establish an integrated information management service platform covering administrative committees, industry authorities, regional enterprises, and related operating entities in the Special Area. Lin-gang Special Area will focus on investment, trade, finance, network, ecological environment, cultural security, personnel access, anti-terrorism, anti-secession, public morality and other key areas, improve management measures such as foreign investment security review, anti-monopoly review, industry management, user authentication, and behavior audit, and strengthen the application of information technology in risk assessment and prevention. Lin-gang Special Area will establish a joint defense and control mechanism, implement strict, precise, and effective supervision, develop precise risk monitoring mechanisms for special areas such as quarantine, origin, intellectual property rights, international conventions, and cross-border funds to realize real-time risk monitoring and dynamic early warning management in the whole process.

 

2) Strengthening Rating-based Credit Management

Lin-gang Special Area will improve the basic rules and standards for credit evaluation, implement the adaptive management for operators, and take credit ratings as a necessary basis for enterprises to enjoy preferential policies and institutional convenience in accordance with the principle of “convenience for law-abiding companies”. Lin-gang Special Area will establish an active disclosure system and implement the system of disclosing dishonest lists, prohibiting market entry and withdrawing from the market. The revocation system of commercial registration will be improved, so the registrations obtained by fraudulence, bribery or other improper means may be revoked by the registration authority according to law.

 

3) Strengthening Border Security

Lin-gang Special Area will construct a high-standard intelligent supervision infrastructure to achieve interconnection, mutual recognition and sharing of regulatory information. Lin-gang Special Area shall keep the first red line of national security and the second red line of economic and social security. Lin-gang Special Area will strengthen the security management of entry and implement a “two-stage access” supervision mode for imported goods. For prohibited and controlled goods (such as nuclear and biotechnical explosive and drugs), goods that may cause major epidemics, high-risk products, other goods with the risks of major emergencies or difficult to control after release, and those that are listed by laws and administrative regulations, the “permission to access” supervision shall be implemented in accordance with laws. For other goods with low risks or controllable risks, “qualified for market” supervision shall be implemented in accordance with laws.

 

4. Building an Open Industrial System Competitive in the Global Market

Lin-gang Special Area will take advantage of the open institution to promote the integration of international business, cross-border financial services, cutting-edge scientific and technological research and development, cross-border service trade, and other functions. The Special Area will strengthen the clustering capacity of open economy, accelerate the transformation and upgrading of stock enterprises, and improve the overall industrial energy level of the region.

 

1) Establishing the Cutting-edge Industrial Clusters with Breakthroughs in Key and Core Technologies

Lin-gang Special Area will construct a comprehensive industrial base for integrated circuits, optimize the full-scale bonded supervision model for imported materials, support multinational companies to set up offshore R&D and manufacturing centers, and promote the development of key fields such as core chips, unique techniques, key equipment, and necessary materials. Lin-gang Special Area will construct demonstration zones for artificial intelligence innovation and application, accelerate the opening of application scenarios, and promote the development of new industries such as intelligent automobiles, intelligent manufacturing, and intelligent robots. Lin-gang Special Area will construct an industrial cluster for civil aviation, with large passenger aircraft and civil aviation engines as the core, accelerate the accumulation of supporting industries such as fundamental research, technology development, product development, test and verification, and other supporting industries, and promote the development of aviation industry chain including assembly and delivery, production support, operation and maintenance, and travel services. Lin-gang Special Area will build maintenance and green remanufacturing centers for countries and regions along the “Belt and Road,” establish a green certification and rating system, and support the inbound maintenance and remanufacturing of products like numerical control machine tools and engineering equipment in the comprehensive free trade zone to enhance the competitiveness of high-end intelligent remanufacturing industry in the world.

 

2) Developing the New-type International Trade

Lin-gang Special Area will establish an Asia-Pacific supply chain management center, and improve the institutional support system for new international trade, international market investment services, and international market financing services to attract organizations to set headquarters. The Special Area will develop cross-border digital trade and support the establishment of overseas warehouses of cross-border e-commerce. Lin-gang Special Area will construct an international medical service cluster and support cooperation with foreign institutions in developing cross-border medical insurance products and pilot international medical insurance settlement projects. Besides, Lin-gang Special Area will allow qualified foreign-owned enterprises to conduct cultural art exhibitions, auctions, and transactions.

 

3) Building a High-level Global Shipping Hub

Lin-gang Special Area will support Shanghai Pudong International Airport in building a world-class aviation hub, an air cargo terminal with integrated functions of logistics, sorting and supervision, a regional base for aviation headquarters, and an international hub for air express. Lin-gang Special Area will promote the full implementation of combined transport for international passengers and baggage. Lin-gang Special Area will establish an international shipping supply service system to improve the comprehensive service capabilities of ship and aviation supplies, maintenance, spare parts, fuel oil, and support domestic and foreign enterprises and institutions to develop shipping financing, shipping insurance, shipping settlement, shipping materials leasing, ship trading, and shipping arbitration services, explore the development of shipping index derivatives business, and enhance high-level shipping services.

 

4) Expanding Cross-border Financial Services

Lin-gang Special Area will vigorously expand the depth and breadth of RMB cross-border financial services, support the development of RMB cross-border trade financing and refinancing business, and encourage multinational companies to establish global or regional fund management centers. Lin-gang Special Area will accelerate the development of finance leasing of aircraft and ships and motivate the development of green finance businesses such as environmental pollution liability insurance.

 

5) Promoting the Integrated Development of Industries and Cities

Lin-gang Special Area will expand channels for introducing high-quality international capital and experience into public services such as education, health care, culture, sports, park construction, and urban management, strengthen the management of infrastructure construction in the Special Area, and provide the high-quality and international urban services.

 

6) Enhancing the Coordinated and Innovative Development of Yangtze River Delta. 

Lin-gang Special Area will support domestic and foreign investors to set up joint innovation special funds in the Special Area, cooperate on major scientific research projects, and allow relevant funds to be freely used in the Yangtze River Delta region. Lin-gang Special Area will support private equity fund initiated abroad by domestic investors to participate in the financing of innovative technology companies in the Special Area and to invest in the Yangtze River Delta region, and support the expansion of dominant industries into the Yangtze River Delta region to form industrial clusters.

 

5. Accelerating the Implementation

Ling-gang Special Area shall be managed with reference to the special economic zone. The relevant national government departments and Shanghai Municipal People’s Government shall, in accordance with the requirements of the Overall Plan, strengthen the construction of the rule of law and risk prevention and control, earnestly safeguard national and social security, and solidly promote the implementation of the pilot tasks of various reforms to achieve results.

 

1) Strengthening the Leadership of CPC

Lin-gang Special Area should strengthen the consciousness of the need to maintain political integrity, think in big-picture terms, uphold the leadership core, and keep in alignment, remain firmly confident in the path, theory, system and culture of socialism with Chinese characteristics, and uphold the authority of the CPC Central Committee with Comrade Xi Jinping at its core. Lin-gang Special Area should cultivate and practice the core values of socialism, and always carry out the construction of CPC throughout the entire process of planning and development of the Special Area, and transfer the political and organizational advantages of the party into a reliable guarantee for the comprehensive deepening of reform and opening up in the Special Area.

 

2) Greater Empowerment

Lin-gang Special Area will be empowered greater management authority to independently develop, reform, and innovate. Lin-gang Special Area Administration will be authorized to carry out innovative business close to the market independently under the premise that risks are controlled. All reform and opening-up measures in the Special Area that involve adjustments to the existing laws or administrative regulations shall be implemented after authorization by the National People’s Congress or the State Council by the statutory procedures.

 

3) Driving a New Round of Reform and Opening-up in the Yangtze River Delta

Lin-gang Special Area will conduct regular summary and evaluation of the institutional experience in investment management, trade supervision, financial opening, talent flow, transportation management, risk management and control in the Special Area, formulate promotion lists, clarify the scope of promotion and regulatory requirements, and promote the implementation in an orderly manner after approval in accordance with the procedures. Lin-gang Special Area will strengthen its linkage with the special customs supervision areas and the economic and technological development zones to amplify the radiation effect.

 

4) Implementing and Organizing at a Faster Pace

Relevant state departments will further delegate power to Shanghai Municipal People’s Government and the Shanghai units of state departments to support and guide the formulation of relevant implementation rules in accordance with the Overall Plan.

The CPC Shanghai Municipal Committee and the Shanghai Municipal People’s Government shall earnestly fulfill their responsibilities, construct Lin-gang Special Area with high standards and quality, and accelerate the formation of a mature institutional and management system to stimulate the market subjects to participate in the international market. Major issues shall be reported to the CPC Central Committee and the State Council of the People’s Republic of China in time.