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6 White Paper on the Business Environment in China
vestments in auto, banking, insurance, telecommunications and and deepen reforms, and stated that foreign and domestic com-
broadcasting as well as cinema, film and TV production. Invest- panies should be treated equally.2
ment in news portals and online gaming would be banned. 10
In July 2014, the Shanghai municipality unveiled an upgraded Financial analysts say hints of positive change are appear-
version of the zone’s “negative list” with the number of items on ing, in particular ways to move money into and out of China
the list cut from 190 to 139, hailed as “a major breakthrough.” 3 using business entities registered in the zone. The adjustments
are highly technical but do suggest efforts 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.5 Overall, 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. The financial industry free from existing restrictions, cash pooling of RMB accounts
received a strong boost in the revisions, with foreign investment via a consolidated account, elimination of the SAFE approval
now freely permitted into investment banks, financial com- requirement for overseas investments under US$300 million,
panies, trust companies, and currency brokerage companies. streamlined customs and CIQ clearance procedures, and the
Terms governing investment into China’s booming healthcare establishment of a Shanghai International Arbitration Court
industry were also revised, including abolition of the RMB 20 aims to provide fairer dispute resolutions are examples of the
million minimum investment and maximum operation period tangible benefits to those in the FTZ. 2
of 20 years for medical institutions.5 The cybercafé industry was
liberalized, along with a larger trend of relaxed restrictions on The most successful reforms have been rolled out quickly
the entertainment industry in the FTZ where previously Chi- nationwide, increasing the impact of the reforms. For example,
na’s twelve-year ban on video game consoles was lifted. Investors Customs recently announced that it would roll out nationally
from Hong Kong and Macau were granted several preferential 14 Customs measures launched in the FTZ. The measures sim-
policies by the revised Negative List including freer investment plified the efficiency of customs clearance procedures, boosting
into the construction and operation of movie theaters, as well as trade volume in the zone and improving the overall business en-
a wide range of aviation transport ground-based services.5 vironment. In the financial sector, cancellation of the minimum
capital requirement was first relaxed in the FTZ and rolled
During President Xi Jinping’s first visit to the SFTZ in May out nationally in March 2014. Elimination of government-de-
2014, he delivered a cautious endorsement. According to Xin- termined interest rates on forex accounts under US$3 million
hua, President Xi declared: “The decision to build the zone was started in the zone and has now expanded elsewhere, as has the
an important step of China’s reform and opening up in modern planned elimination of restrictions on wholly foreign-invested
times.” He added that management of the SFTZ “should com- hospitals.2
bine structural reform and the exploration of new methods,
while controlling risks and gradually making improvements.” A An example of how the SFTZ provides real business advan-
few days later, he commented that, “The experience gained at tages is demonstrated by Amazon which decided establish a lo-
China’s Shanghai Pilot Free Trade Zone (Shanghai FTZ) can gistics warehouse in the FTZ and which will allow Amazon to
be copied to more places as soon as possible”, comparing it to open its global platform for domestic markets and also to make
“seeds cultivated from an experimental plot. We should plant cross-border payments and experiment with other financial re-
these seeds in more land so that flowers will blossom and fruits forms.2
be harvested as quickly as possible.” 11
A year after the launch, Beijing said it was lifting restrictions
Business leaders view the President’s visit as symbolically im- on foreign investments in several industries, such as the ship-
portant and his endorsement, though mild, as significant, say ping sector in the SFTZ, reported the South China Morning
the Wall Street Journal. Even a brief visit by the president to Post, in a bid to encourage the world’s biggest shipping lines to
the SFTZ, said Stefan Sack, a Shanghai representative from the expand in China, as they could now directly tap the booming
European Chamber of Commerce in China, “gives it additional business at the Yangshan deep-water port, which is part of the
value.”11 In October 2014, President Xi Jinping made his en- FTZ. The new measures also include lifting of some restrictions
dorsement even clearer by declaring, that more than a year after in the manufacturing sector, such as on motorcycles, aviation
its launch, the example of the SFTZ “should now be copied in engine parts and railway-bridge and station equipment, also
more provinces as soon as possible.”18 aimed at wooing foreign investors to the zone.3
In September 2014, Premier Li Keqiang did a two-day tour The policy change follows Premier Li Keqiang’s statement
of the SFTZ, where he re-affirmed the central government’s in September 2014 that market forces would be allowed to play
commitment to the FTZ, pushed FTZ authorities to accelerate a dominant role in the FTZ. The South China Morning Post
reports, according to a circular to ministries and provincial gov-
66 ernments from the State Council, more than 20 sectors are to be
vestments in auto, banking, insurance, telecommunications and and deepen reforms, and stated that foreign and domestic com-
broadcasting as well as cinema, film and TV production. Invest- panies should be treated equally.2
ment in news portals and online gaming would be banned. 10
In July 2014, the Shanghai municipality unveiled an upgraded Financial analysts say hints of positive change are appear-
version of the zone’s “negative list” with the number of items on ing, in particular ways to move money into and out of China
the list cut from 190 to 139, hailed as “a major breakthrough.” 3 using business entities registered in the zone. The adjustments
are highly technical but do suggest efforts 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.5 Overall, 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. The financial industry free from existing restrictions, cash pooling of RMB accounts
received a strong boost in the revisions, with foreign investment via a consolidated account, elimination of the SAFE approval
now freely permitted into investment banks, financial com- requirement for overseas investments under US$300 million,
panies, trust companies, and currency brokerage companies. streamlined customs and CIQ clearance procedures, and the
Terms governing investment into China’s booming healthcare establishment of a Shanghai International Arbitration Court
industry were also revised, including abolition of the RMB 20 aims to provide fairer dispute resolutions are examples of the
million minimum investment and maximum operation period tangible benefits to those in the FTZ. 2
of 20 years for medical institutions.5 The cybercafé industry was
liberalized, along with a larger trend of relaxed restrictions on The most successful reforms have been rolled out quickly
the entertainment industry in the FTZ where previously Chi- nationwide, increasing the impact of the reforms. For example,
na’s twelve-year ban on video game consoles was lifted. Investors Customs recently announced that it would roll out nationally
from Hong Kong and Macau were granted several preferential 14 Customs measures launched in the FTZ. The measures sim-
policies by the revised Negative List including freer investment plified the efficiency of customs clearance procedures, boosting
into the construction and operation of movie theaters, as well as trade volume in the zone and improving the overall business en-
a wide range of aviation transport ground-based services.5 vironment. In the financial sector, cancellation of the minimum
capital requirement was first relaxed in the FTZ and rolled
During President Xi Jinping’s first visit to the SFTZ in May out nationally in March 2014. Elimination of government-de-
2014, he delivered a cautious endorsement. According to Xin- termined interest rates on forex accounts under US$3 million
hua, President Xi declared: “The decision to build the zone was started in the zone and has now expanded elsewhere, as has the
an important step of China’s reform and opening up in modern planned elimination of restrictions on wholly foreign-invested
times.” He added that management of the SFTZ “should com- hospitals.2
bine structural reform and the exploration of new methods,
while controlling risks and gradually making improvements.” A An example of how the SFTZ provides real business advan-
few days later, he commented that, “The experience gained at tages is demonstrated by Amazon which decided establish a lo-
China’s Shanghai Pilot Free Trade Zone (Shanghai FTZ) can gistics warehouse in the FTZ and which will allow Amazon to
be copied to more places as soon as possible”, comparing it to open its global platform for domestic markets and also to make
“seeds cultivated from an experimental plot. We should plant cross-border payments and experiment with other financial re-
these seeds in more land so that flowers will blossom and fruits forms.2
be harvested as quickly as possible.” 11
A year after the launch, Beijing said it was lifting restrictions
Business leaders view the President’s visit as symbolically im- on foreign investments in several industries, such as the ship-
portant and his endorsement, though mild, as significant, say ping sector in the SFTZ, reported the South China Morning
the Wall Street Journal. Even a brief visit by the president to Post, in a bid to encourage the world’s biggest shipping lines to
the SFTZ, said Stefan Sack, a Shanghai representative from the expand in China, as they could now directly tap the booming
European Chamber of Commerce in China, “gives it additional business at the Yangshan deep-water port, which is part of the
value.”11 In October 2014, President Xi Jinping made his en- FTZ. The new measures also include lifting of some restrictions
dorsement even clearer by declaring, that more than a year after in the manufacturing sector, such as on motorcycles, aviation
its launch, the example of the SFTZ “should now be copied in engine parts and railway-bridge and station equipment, also
more provinces as soon as possible.”18 aimed at wooing foreign investors to the zone.3
In September 2014, Premier Li Keqiang did a two-day tour The policy change follows Premier Li Keqiang’s statement
of the SFTZ, where he re-affirmed the central government’s in September 2014 that market forces would be allowed to play
commitment to the FTZ, pushed FTZ authorities to accelerate a dominant role in the FTZ. The South China Morning Post
reports, according to a circular to ministries and provincial gov-
66 ernments from the State Council, more than 20 sectors are to be
