Page 78 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
said. “More than 100 innovative institutions have been FTZ and the existing infrastructure, FTZs have supply
applied across the nation through these years.” Experts chain advantages. FTZs have liberalized policy for
said such an ambition would be accompanied by plans foreign invested enterprises (FIEs) in specific industries
to further relax import cargo controls and streamline or capabilities that are not yet widely available in China.
customs clearance in accordance with international For instance, logistics companies established within FTZs
practice. “The prospective free trade port is likely to test are allowed to invest up to 51 percent in international
the waters for trade facilitation measures and provide or domestic shipping agencies. Additionally, in the
policy support to the high-tech sector,” according to Sun Shanghai FTZ, foreign ships are allowed to ship to other
Yuanxin, Deputy Director of the Research Institute for the domestic ports; shipment between domestic ports
Shanghai FTZ at the Shanghai University of Finance and was previously limited to Chinese-owned ships. In the
Economics. “Free trade port means beyond the current pharmaceuticals sector, under article 10 of the Plan,
model of bonded areas,” said Zhu Min, deputy director owners of intellectual property (IP) for medical devices
of Shanghai Municipal Development and Reform can now entrust production of the device to an eligible
Commission. “It will take about three to four years to original equipment manufacturer (OEM) in Shanghai; the
redesign a comprehensive set of rules and revise related IP owner and the manufacturer previously had to be the
regulations.” Shanghai’s FTZ has become a growth same (Erdenebileg).
engine, contributing to a quarter of the city’s economic
output this year, said Weng Zuliang, Party Secretary of General Secretary (and President) Xi Jinping
Shanghai’s Pudong New Area. A total of 49,000 newly reiterated the importance of FTZs in a report delivered
established enterprises, 20 percent of which are foreign at the opening session of the 19th National Congress of
capital-backed, have set foot in the zone by August, the Communist Party of China. Xi said the government
exceeding the number of companies registered in the will grant more powers to pilot FTZs to conduct reform,
previous two decades, Weng said (Li). and explore the opening of free trade ports. Meanwhile,
the government will adopt policies to promote high-
FTZs are an excellent investment for both the standard liberalization and facilitation of trade and
country of China for American businesses. Dezan Shira investment, significantly ease market access, further
& Associates summed up four primary incentives for open the service sector, and protect the legitimate
foreign businesses to invest in an FTZ: tax; customs rights and interest of foreign investors. “All businesses
clearance; international trading center benefits; and, registered in China will be treated equally,” Xi said (Shi).
industry-specific liberalizations. Four FTZs offer a
reduced corporate income tax (CIT) of 15 percent
if the firm fulfills certain requirements. These areas
are Hengqing New Area, Guangdong FTZ; Qianhai
Shenzhen-Hong Kong Modern Service Industry
Cooperation Zone (Qianhai Shenzhen- Hong Kong
Zone), Guangdong FTZ; and Pingtan Comprehensive
Experimental Area, Fujian. FTZs have started to
experiment with other forms of tax benefits. For
instance, in the Shanghai FTZ, a FTZ-registered company
can pay CIT in installments over a five-year period if the
value of its interest in a portfolio company increases
because of non-cash restructuring. Most FTZs allow duty
free import for any machinery and other equipment
for company self-use. The customs clearance process
is more streamlined within the FTZs, particularly in
regards to clearance declarations and payments. For
instance, firms can declare several batches of goods
on a single form and make a collective declaration for
imports and exports of goods. This reduces clearance
costs and increases declaration flexibility for firms. Due
to the number of companies already located within the
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said. “More than 100 innovative institutions have been FTZ and the existing infrastructure, FTZs have supply
applied across the nation through these years.” Experts chain advantages. FTZs have liberalized policy for
said such an ambition would be accompanied by plans foreign invested enterprises (FIEs) in specific industries
to further relax import cargo controls and streamline or capabilities that are not yet widely available in China.
customs clearance in accordance with international For instance, logistics companies established within FTZs
practice. “The prospective free trade port is likely to test are allowed to invest up to 51 percent in international
the waters for trade facilitation measures and provide or domestic shipping agencies. Additionally, in the
policy support to the high-tech sector,” according to Sun Shanghai FTZ, foreign ships are allowed to ship to other
Yuanxin, Deputy Director of the Research Institute for the domestic ports; shipment between domestic ports
Shanghai FTZ at the Shanghai University of Finance and was previously limited to Chinese-owned ships. In the
Economics. “Free trade port means beyond the current pharmaceuticals sector, under article 10 of the Plan,
model of bonded areas,” said Zhu Min, deputy director owners of intellectual property (IP) for medical devices
of Shanghai Municipal Development and Reform can now entrust production of the device to an eligible
Commission. “It will take about three to four years to original equipment manufacturer (OEM) in Shanghai; the
redesign a comprehensive set of rules and revise related IP owner and the manufacturer previously had to be the
regulations.” Shanghai’s FTZ has become a growth same (Erdenebileg).
engine, contributing to a quarter of the city’s economic
output this year, said Weng Zuliang, Party Secretary of General Secretary (and President) Xi Jinping
Shanghai’s Pudong New Area. A total of 49,000 newly reiterated the importance of FTZs in a report delivered
established enterprises, 20 percent of which are foreign at the opening session of the 19th National Congress of
capital-backed, have set foot in the zone by August, the Communist Party of China. Xi said the government
exceeding the number of companies registered in the will grant more powers to pilot FTZs to conduct reform,
previous two decades, Weng said (Li). and explore the opening of free trade ports. Meanwhile,
the government will adopt policies to promote high-
FTZs are an excellent investment for both the standard liberalization and facilitation of trade and
country of China for American businesses. Dezan Shira investment, significantly ease market access, further
& Associates summed up four primary incentives for open the service sector, and protect the legitimate
foreign businesses to invest in an FTZ: tax; customs rights and interest of foreign investors. “All businesses
clearance; international trading center benefits; and, registered in China will be treated equally,” Xi said (Shi).
industry-specific liberalizations. Four FTZs offer a
reduced corporate income tax (CIT) of 15 percent
if the firm fulfills certain requirements. These areas
are Hengqing New Area, Guangdong FTZ; Qianhai
Shenzhen-Hong Kong Modern Service Industry
Cooperation Zone (Qianhai Shenzhen- Hong Kong
Zone), Guangdong FTZ; and Pingtan Comprehensive
Experimental Area, Fujian. FTZs have started to
experiment with other forms of tax benefits. For
instance, in the Shanghai FTZ, a FTZ-registered company
can pay CIT in installments over a five-year period if the
value of its interest in a portfolio company increases
because of non-cash restructuring. Most FTZs allow duty
free import for any machinery and other equipment
for company self-use. The customs clearance process
is more streamlined within the FTZs, particularly in
regards to clearance declarations and payments. For
instance, firms can declare several batches of goods
on a single form and make a collective declaration for
imports and exports of goods. This reduces clearance
costs and increases declaration flexibility for firms. Due
to the number of companies already located within the
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