Aug 07, 2019 04:09 AM

China Expands Shanghai Free Trade Zone to Attract Tech Firms

China expands the Shanghai FTZ to include Lingang area. Photo: VCG
China expands the Shanghai FTZ to include Lingang area. Photo: VCG

China’s State Council, the cabinet, issued an overall plan for a newly added area to the six-year-old Shanghai Free Trade Zone, touting preferential tax and supportive policies to attract high-tech companies.

The new Lingang area, located on the southeast coast of Shanghai, is already home to some leading companies, including Tesla Inc., which is building its first overseas electric-car factory there.

The new area will match the standards of the most competitive free trade zones worldwide and will implement opening-up policies and systems with strong global market competitiveness, aiming to build a relatively mature system of free investment and trade by 2025, according to the plan.

The expansion of the Shanghai Free Trade Zone was first proposed by President Xi Jinping last November at the China International Import Expo in Shanghai as an “important strategic measure” to promote reform and opening-up.

In contrast with other sections that are designed to build an “international high-standard free trade zone,” the new Lingang area will focus on building a “special economic function zone” with strong global market influence and competitiveness by 2035, Wang Shouwen, vice commerce minister, told a press conference Tuesday.

The new area will be given greater authority over autonomous development, reform and innovation, Wang said.

Chen Yin, executive vice mayor of Shanghai, said at the press conference that special policies will also be provided to the new area, including policies on financial support, talent attraction, land planning and housing.

Shanghai will set up a special development fund for the new area with a total investment of at least 100 billion yuan ($14.2 billion) over five years, focusing on attracting talent and infrastructure construction, Chen said.

The new area will also be used as a testing ground for freer and more open and convenient financial policies. For example, the 11 new rules on opening up the financial sector released by the State Council’s financial stability commission two weeks ago will first be implemented in the new Lingang area, Wang Xin, director of the central bank’s research bureau, said at the press conference.

Enterprises in key industries such as integrated circuits, artificial intelligence, biomedicine and civil aviation will enjoy a 15% income tax rate for the first five years, compared with the standard 25%, vice mayor Chen said.

Lingang was selected as the new site because with nearly 120 square kilometers the area has certain development space and perfect international transport conditions, Chen said.

With the support of Yangshan Deep-Water Port, Pudong International Airport, railways, highways, rail transit and high-grade inland waterways, Lingang has the best transport conditions among similar free trade zones around the world, Chen said.

The area has already attracted a leading group of domestic and international companies, including car maker SAIC Motor Corp., Shanghai Electric, Sany Heavy Industry Co., Siemens AG, Caterpillar Inc. and General Electric Co., according to Chen.

Contact editor Han Wei (

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