Page 88 - 2017 White Paper
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7 White Paper on the Business Environment in China
as possible”, comparing it to “seeds cultivated from an requirement was first relaxed in the FTZ and rolled out
experimental plot. We should plant these seeds in more nationally in March 2014. Elimination of government-
land so that flowers will blossom and fruits be harvested determined interest rates on forex accounts under
as quickly as possible” (Areddy 2014). US$3 million started in the zone and has now expanded
elsewhere, as has the planned elimination of restrictions
Business leaders view the President’s visit as on wholly foreign-invested hospitals (Baccam 2014).
symbolically important and his endorsement, though
mild, as significant, says the Wall Street Journal. Even a An example of how the SFTZ provides real business
brief visit by the president to the SFTZ, said Stefan Sack, advantages is demonstrated by Amazon which decided
a Shanghai representative from the European Chamber establish a logistics warehouse in the FTZ and which will
of Commerce in China, “gives it additional value” (Areddy allow Amazon to open its global platform for domestic
2014). In October 2014, President Xi Jinping made his markets and also to make cross-border payments and
endorsement even clearer by declaring, that more than a experiment with other financial reforms (Baccam 2014).
year after its launch, the example of the SFTZ“should now
be copied in more provinces as soon as possible” (Swire A year after the launch, Beijing said it was lifting
2014). restrictions on foreign investments in several industries,
such as the shipping sector in the SFTZ, reported the
In September 2014, Premier Li Keqiang did a two- South China Morning Post, in a bid to encourage the
day tour of the SFTZ, where he re-affirmed the central world’s biggest shipping lines to expand in China, as
government’s commitment to the FTZ, pushed FTZ they could now directly tap the booming business at the
authorities to accelerate and deepen reforms, and stated Yangshan deep-water port, which is part of the FTZ. The
that foreign and domestic companies should be treated new measures also include lifting of some restrictions
equally (Baccam 2014). in the manufacturing sector, such as on motorcycles,
aviation engine parts and railway-bridge and station
Financial analysts say hints of positive change are equipment, also aimed at wooing foreign investors to the
appearing, in particular ways to move money into and out zone (South China Morning Post 2014a).
of China using business entities registered in the zone.
The adjustments are highly technical but do suggest The policy change follows Premier Li Keqiang’s
efforts to introduce a more market-oriented currency- statement in September 2014 that market forces would
exchange policy (Areddy 2014). be allowed to play a dominant role in the FTZ. The South
China Morning Post reports, according to a circular to
Measures such as the establishment of Free Trade ministries and provincial governments from the State
Accounts (FTA) which will allow companies registered Council, more than 20 sectors are to be opened up to
in the FTZ to conduct cross-border transfers of foreign overseas investors in the FTZ. For the first time, they will
currency and RMB free from existing restrictions, cash be allowed to own a controlling stake in joint-venture
pooling of RMB accounts via a consolidated account, shipping agencies, with the investment cap raised from
elimination of the SAFE approval requirement for overseas 49 to 51 per cent. Foreign investors will also be allowed
investments under US$300 million, streamlined customs to engage in salt wholesaling (South China Morning Post
and CIQ clearance procedures, and the establishment of a 2014a).
Shanghai International Arbitration Court aims to provide
fairer dispute resolutions are examples of the tangible In November 2014, the Post reported that Shanghai
benefits to those in the FTZ (Baccam 2014). Mayor Yang Xiong promised to speed up development
of the SFTZ as a chorus of foreign companies expressed
The most successful reforms have been rolled out disappointment over the pace of pledged reforms a
quickly nationwide, increasing the impact of the reforms. year after the zone’s opening. Mayor Yang said the
For example, Customs recently announced that it would government would work towards making the yuan freely
roll out nationally 14 Customs measures launched in the convertible, among other financial liberalization plans for
FTZ. The measures simplified the efficiency of customs the FTZ, but gave no timetable. Yang said the municipal
clearance procedures, boosting trade volume in the zone government would also offer a revised “negative list” in
and improving the overall business environment. In the 2015, following criticism that the two previous lists were
financial sector, cancellation of the minimum capital too long (South China Morning Post 2014b).
88
as possible”, comparing it to “seeds cultivated from an requirement was first relaxed in the FTZ and rolled out
experimental plot. We should plant these seeds in more nationally in March 2014. Elimination of government-
land so that flowers will blossom and fruits be harvested determined interest rates on forex accounts under
as quickly as possible” (Areddy 2014). US$3 million started in the zone and has now expanded
elsewhere, as has the planned elimination of restrictions
Business leaders view the President’s visit as on wholly foreign-invested hospitals (Baccam 2014).
symbolically important and his endorsement, though
mild, as significant, says the Wall Street Journal. Even a An example of how the SFTZ provides real business
brief visit by the president to the SFTZ, said Stefan Sack, advantages is demonstrated by Amazon which decided
a Shanghai representative from the European Chamber establish a logistics warehouse in the FTZ and which will
of Commerce in China, “gives it additional value” (Areddy allow Amazon to open its global platform for domestic
2014). In October 2014, President Xi Jinping made his markets and also to make cross-border payments and
endorsement even clearer by declaring, that more than a experiment with other financial reforms (Baccam 2014).
year after its launch, the example of the SFTZ“should now
be copied in more provinces as soon as possible” (Swire A year after the launch, Beijing said it was lifting
2014). restrictions on foreign investments in several industries,
such as the shipping sector in the SFTZ, reported the
In September 2014, Premier Li Keqiang did a two- South China Morning Post, in a bid to encourage the
day tour of the SFTZ, where he re-affirmed the central world’s biggest shipping lines to expand in China, as
government’s commitment to the FTZ, pushed FTZ they could now directly tap the booming business at the
authorities to accelerate and deepen reforms, and stated Yangshan deep-water port, which is part of the FTZ. The
that foreign and domestic companies should be treated new measures also include lifting of some restrictions
equally (Baccam 2014). in the manufacturing sector, such as on motorcycles,
aviation engine parts and railway-bridge and station
Financial analysts say hints of positive change are equipment, also aimed at wooing foreign investors to the
appearing, in particular ways to move money into and out zone (South China Morning Post 2014a).
of China using business entities registered in the zone.
The adjustments are highly technical but do suggest The policy change follows Premier Li Keqiang’s
efforts to introduce a more market-oriented currency- statement in September 2014 that market forces would
exchange policy (Areddy 2014). be allowed to play a dominant role in the FTZ. The South
China Morning Post reports, according to a circular to
Measures such as the establishment of Free Trade ministries and provincial governments from the State
Accounts (FTA) which will allow companies registered Council, more than 20 sectors are to be opened up to
in the FTZ to conduct cross-border transfers of foreign overseas investors in the FTZ. For the first time, they will
currency and RMB free from existing restrictions, cash be allowed to own a controlling stake in joint-venture
pooling of RMB accounts via a consolidated account, shipping agencies, with the investment cap raised from
elimination of the SAFE approval requirement for overseas 49 to 51 per cent. Foreign investors will also be allowed
investments under US$300 million, streamlined customs to engage in salt wholesaling (South China Morning Post
and CIQ clearance procedures, and the establishment of a 2014a).
Shanghai International Arbitration Court aims to provide
fairer dispute resolutions are examples of the tangible In November 2014, the Post reported that Shanghai
benefits to those in the FTZ (Baccam 2014). Mayor Yang Xiong promised to speed up development
of the SFTZ as a chorus of foreign companies expressed
The most successful reforms have been rolled out disappointment over the pace of pledged reforms a
quickly nationwide, increasing the impact of the reforms. year after the zone’s opening. Mayor Yang said the
For example, Customs recently announced that it would government would work towards making the yuan freely
roll out nationally 14 Customs measures launched in the convertible, among other financial liberalization plans for
FTZ. The measures simplified the efficiency of customs the FTZ, but gave no timetable. Yang said the municipal
clearance procedures, boosting trade volume in the zone government would also offer a revised “negative list” in
and improving the overall business environment. In the 2015, following criticism that the two previous lists were
financial sector, cancellation of the minimum capital too long (South China Morning Post 2014b).
88
