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5 White Paper on the Business Environment in China
China has started trading gold internationally within the zone was an important step of China’s reform and opening
up in modern times.” He added that management of the
SFTZ starting in the nal quarter of 2014. e newly SFTZ “should combine structural reform and the exploration
of new methods, while controlling risks and gradually
lifted restrictions are already having an e ect; Singapore making improvements.” A few days later, he commented
that, “ e experience gained at China’s Shanghai Pilot Free
is introducing a physical gold contract with China.13 Trade Zone (Shanghai FTZ) can be copied to more places as
soon as possible”, comparing it to “seeds cultivated from an
Launched a day ahead of the October 1 National Day experimental plot. We should plant these seeds in more land
holiday in 2013, the SFTZ had earlier been tipped to be so that owers will blossom and fruits be harvested as quickly
the testing ground for liberalizing interest rates, now subject as possible.” 11
to central bank guidelines, and contribute to the longer-
term goal of opening the capital account, which covers Business leaders view the President’s visit as symbolically
investments. However, the Wall Street Journal was quick important and his endorsement, though mild, as signi cant,
to point out that these reforms got no speci c mention on say the Wall Street Journal. Even a brief visit by the president
opening day. According to an o cial statement, nancial to the SFTZ, said Stefan Sack, a Shanghai representative
experiments would proceed “as conditions allowed” and “risks from the European Chamber of Commerce in China, “gives
would be controlled”. Rules would be put in place over a it additional value.”11 In October 2014, President Xi Jinping
three-year period. e opening day’s no-show by Premier Li, made his endorsement even clearer by declaring, that more
a key supporter of the SFTZ, sent “a message of top-level than a year after its launch, the example of the SFTZ “should
uncertainty” about the SFTZ. 10 now be copied in more provinces as soon as possible.”18
A “negative list” running to 10 pages with more than 200 In September 2014, Premier Li Keqiang did a two-day
restrictions was later announced. ose included limits on in- tour of the SFTZ, where he re-a rmed the central govern-
vestments in auto, banking, insurance, telecommunications ment’s commitment to the FTZ, pushed FTZ authorities to
and broadcasting as well as cinema, lm and TV produc- accelerate and deepen reforms, and stated that foreign and
tion. Investment in news portals and online gaming would domestic companies should be treated equally.2
be banned. 10 In July 2014, the Shanghai municipality un-
veiled an upgraded version of the zone’s “negative list” with Financial analysts say hints of positive change are appear-
the number of items on the list cut from 190 to 139, hailed as ing, in particular ways to move money into and out of China
“a major breakthrough.” 3 using business entities registered in the zone. e adjustments
are highly technical but do suggest e orts to introduce a more
A thorough analysis of the changes to the revised negative market-oriented currency-exchange policy.11
list, as conducted by Dezan Shira & Associates, reveals greater
cause for celebration.5Overall, the majority of these changes Measures such as the establishment of Free Trade Accounts
are concentrated in the categories of (C) Manufacturing and (FTA) which will allow companies registered in the FTZ to
(G) Transportation, Warehousing, and Postal Services, and to conduct cross-border transfers of foreign currency and RMB
a lesser extent (F) Wholesale & Retail. e nancial industry free from existing restrictions, cash pooling of RMB accounts
received a strong boost in the revisions, with foreign invest- via a consolidated account, elimination of the SAFE approval
ment now freely permitted into investment banks, nancial requirement for overseas investments under US$300 million,
companies, trust companies, and currency brokerage com- streamlined customs and CIQ clearance procedures, and the
panies. Terms governing investment into China’s booming establishment of a Shanghai International Arbitration Court
healthcare industry were also revised, including abolition of aims to provide fairer dispute resolutions are examples of the
the RMB 20 million minimum investment and maximum tangible bene ts to those in the FTZ. 2
operation period of 20 years for medical institutions.5 e
cybercafé industry was liberalized, along with a larger trend e most successful reforms have been rolled out quickly
of relaxed restrictions on the entertainment industry in the nationwide, increasing the impact of the reforms. For ex-
FTZ where previously China’s twelve-year ban on video game ample, Customs recently announced that it would roll out
consoles was lifted. Investors from Hong Kong and Macau nationally 14 Customs measures launched in the FTZ. e
were granted several preferential policies by the revised Nega- measures simpli ed the e ciency of customs clearance proce-
tive List including freer investment into the construction and dures, boosting trade volume in the zone and improving the
operation of movie theaters, as well as a wide range of aviation overall business environment. In the nancial sector, cancel-
transport ground-based services.5 lation of the minimum capital requirement was rst relaxed
in the FTZ and rolled out nationally in March 2014. Elimi-
During President Xi Jinping’s rst visit to the SFTZ in nation of government-determined interest rates on forex ac-
May 2014, he delivered a cautious endorsement. According counts under US$3 million started in the zone and has now
to Xinhua, President Xi declared: “ e decision to build the
58
China has started trading gold internationally within the zone was an important step of China’s reform and opening
up in modern times.” He added that management of the
SFTZ starting in the nal quarter of 2014. e newly SFTZ “should combine structural reform and the exploration
of new methods, while controlling risks and gradually
lifted restrictions are already having an e ect; Singapore making improvements.” A few days later, he commented
that, “ e experience gained at China’s Shanghai Pilot Free
is introducing a physical gold contract with China.13 Trade Zone (Shanghai FTZ) can be copied to more places as
soon as possible”, comparing it to “seeds cultivated from an
Launched a day ahead of the October 1 National Day experimental plot. We should plant these seeds in more land
holiday in 2013, the SFTZ had earlier been tipped to be so that owers will blossom and fruits be harvested as quickly
the testing ground for liberalizing interest rates, now subject as possible.” 11
to central bank guidelines, and contribute to the longer-
term goal of opening the capital account, which covers Business leaders view the President’s visit as symbolically
investments. However, the Wall Street Journal was quick important and his endorsement, though mild, as signi cant,
to point out that these reforms got no speci c mention on say the Wall Street Journal. Even a brief visit by the president
opening day. According to an o cial statement, nancial to the SFTZ, said Stefan Sack, a Shanghai representative
experiments would proceed “as conditions allowed” and “risks from the European Chamber of Commerce in China, “gives
would be controlled”. Rules would be put in place over a it additional value.”11 In October 2014, President Xi Jinping
three-year period. e opening day’s no-show by Premier Li, made his endorsement even clearer by declaring, that more
a key supporter of the SFTZ, sent “a message of top-level than a year after its launch, the example of the SFTZ “should
uncertainty” about the SFTZ. 10 now be copied in more provinces as soon as possible.”18
A “negative list” running to 10 pages with more than 200 In September 2014, Premier Li Keqiang did a two-day
restrictions was later announced. ose included limits on in- tour of the SFTZ, where he re-a rmed the central govern-
vestments in auto, banking, insurance, telecommunications ment’s commitment to the FTZ, pushed FTZ authorities to
and broadcasting as well as cinema, lm and TV produc- accelerate and deepen reforms, and stated that foreign and
tion. Investment in news portals and online gaming would domestic companies should be treated equally.2
be banned. 10 In July 2014, the Shanghai municipality un-
veiled an upgraded version of the zone’s “negative list” with Financial analysts say hints of positive change are appear-
the number of items on the list cut from 190 to 139, hailed as ing, in particular ways to move money into and out of China
“a major breakthrough.” 3 using business entities registered in the zone. e adjustments
are highly technical but do suggest e orts to introduce a more
A thorough analysis of the changes to the revised negative market-oriented currency-exchange policy.11
list, as conducted by Dezan Shira & Associates, reveals greater
cause for celebration.5Overall, the majority of these changes Measures such as the establishment of Free Trade Accounts
are concentrated in the categories of (C) Manufacturing and (FTA) which will allow companies registered in the FTZ to
(G) Transportation, Warehousing, and Postal Services, and to conduct cross-border transfers of foreign currency and RMB
a lesser extent (F) Wholesale & Retail. e nancial industry free from existing restrictions, cash pooling of RMB accounts
received a strong boost in the revisions, with foreign invest- via a consolidated account, elimination of the SAFE approval
ment now freely permitted into investment banks, nancial requirement for overseas investments under US$300 million,
companies, trust companies, and currency brokerage com- streamlined customs and CIQ clearance procedures, and the
panies. Terms governing investment into China’s booming establishment of a Shanghai International Arbitration Court
healthcare industry were also revised, including abolition of aims to provide fairer dispute resolutions are examples of the
the RMB 20 million minimum investment and maximum tangible bene ts to those in the FTZ. 2
operation period of 20 years for medical institutions.5 e
cybercafé industry was liberalized, along with a larger trend e most successful reforms have been rolled out quickly
of relaxed restrictions on the entertainment industry in the nationwide, increasing the impact of the reforms. For ex-
FTZ where previously China’s twelve-year ban on video game ample, Customs recently announced that it would roll out
consoles was lifted. Investors from Hong Kong and Macau nationally 14 Customs measures launched in the FTZ. e
were granted several preferential policies by the revised Nega- measures simpli ed the e ciency of customs clearance proce-
tive List including freer investment into the construction and dures, boosting trade volume in the zone and improving the
operation of movie theaters, as well as a wide range of aviation overall business environment. In the nancial sector, cancel-
transport ground-based services.5 lation of the minimum capital requirement was rst relaxed
in the FTZ and rolled out nationally in March 2014. Elimi-
During President Xi Jinping’s rst visit to the SFTZ in nation of government-determined interest rates on forex ac-
May 2014, he delivered a cautious endorsement. According counts under US$3 million started in the zone and has now
to Xinhua, President Xi declared: “ e decision to build the
58
