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Trade & Money

FTZ draws US$110b investment amid reform

Foreign-funded companies have ploughed over US$110 billion of investment into the Shanghai pilot free trade zone by the end of June, which means every square kilometer of land in the FTZ has attracted around US$900 million, making the area a real “gold magnet” for new economic reform policies.

More than US$100 billion is attributed to institutional innovation in the FTZ over the past five years, and a “negative list,” which restricted foreign investment, has been shortened from 190 items in 2013 to 45 this year.

“The negative list is China’s answer to the prevailing international investment rules,” said Shen Weihua, deputy director of Shanghai Commission of Commerce.

It also issued new rules in June to liberalize the financial sector.

Commercial banks will be allowed to form asset investment and management companies without any cap on foreign ownership and foreigners will be allowed to take majority stakes in domestic life insurance companies based in the zone.

Record filing has replaced registration for the establishment of foreign-invested enterprises. More than 98 percent of foreign-funded companies were established through the way, says Shen.

The Shanghai pilot free trade zone has attracted over US$110 billion of investment, making the area a real “gold magnet” for new economic reform policies.

The FTZ’s opening-up measures helped to attract 340 service companies from January to October, while it has also lured 2,744 companies to set up offices.

Among those achievements were several foreign-funded firsts, including a reinsurance broker, vocational training institute, yacht design company, medical institute, engineering design firm and a certification company to adopt international food safety standards. It helped the establishment of IfFP Professional Skills Training in early September.

The Zurich-based institute for financial planning debuted its Shanghai business in Jinqiao as the first wholly foreign-owned enterprise in the financial education sector on the mainland.

“China’s wealth management market has enormous space, and the Shanghai free trade zone opens a door for us,” said Zhong Ke, general manager of IfFP (Shanghai).

At the same time, Travelex, the largest foreign exchange specialist, has established its Asia headquarters in the FTZ after being granted to license a cross-border transfer and wholesale business of foreign currencies by the State Administration of Foreign Exchange. The new headquarters will enhance its business in neighboring countries, such as Malaysia, Singapore, Thailand and Japan and regions including Hong Kong.

China’s wealth management market has enormous space, and the Shanghai free trade zone opens a door for us.
– Zhong Ke/IfFP

“China’s further opening-up in the financial sector has made us think that the future (business) focus will be in China,” said Cameron Hume, managing director (Asia) and chief executive officer (China) of Travelex.

The FTZ has become an engine of the city’s economic growth. It covers 2 percent of the city’s total area but creates 25 percent of Shanghai’s gross domestic product and 40 percent of the city’s trade.

The FTZ, with an area of 120 square kilometers, generated 42.9 percent of the total import and export of the city in the first 10 months.

The total import and export in the first 10 months in the FTZ has reached 1.21 trillion yuan (US$176 billion), up by 5.8 percent year on year.

In 2017, the FTZ achieved a newly-added actual foreign capital of US$6 billion, which is the highest among all 11 FTZs throughout the country.

The FTZ has also achieved substantial growth in the introduction of foreign capital from January to September. The total amount of foreign investment during the peiod hit US$5.03 billion, with a year-on-year increase of 16.8 percent, and its proportion of total foreign investment in the city rose to 38.9 percent.

Foreign investments were mainly in strategic emerging industries including mobile Internet, biomedicine, medical equipment, information technology, Internet of Things and high-end manufacturing.

Latest foreign investment projects included 1 billion yuan from SAIC Motor and General Motors to set up a financing and car rental company in the FTZ, which will run a car rental business to raise capital.

The FTZ has also attracted more than 600 cultural enterprises and organized more than 40 exhibitions and activities on overseas culture per year on average.


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