No 15 [2019]

The people's governments of all provinces, autonomous regions and municipalities directly under the Central Government, all ministries, commissions and departments directly under the State Council,

The Overall Plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone, approved by the State Council, is hereby printed and distributed to you for earnest compliance.

The State Council

July 27, 2019

This English version is only for reference. To learn more, please refer to the authoritative Chinese version.

Overall plan for Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone

(Excerpts from the overall plan)

1. General requirements

2) Development goals

By 2025, Lin-gang Special Area will have established a relatively mature institutional system featuring the liberalization and facilitation of investment and trade, set up functional platforms with high openness, and enabled the area to become a business cluster for world-class enterprises. The innovation and competitiveness of Lin-gang Special Area will have been improved, and the economic strength and aggregate will have surged. By 2035, Lin-gang Special Area will have been constructed into a special economic functional zone with strong global market influence and competitiveness, fostered more mature institutions, built core functions to allocate worldwide high-end resources, and become an important platform for the country to integrate into economic globalization.

3) Scope of Lin-gang Special Area

Lin-gang Special Area covers the area south to Dazhi River and east to Jinhui Stream, Xiaoyangshan Island and the southern part of Shanghai Pudong International Airport. Under the principle of "overall planning and step-by-step implementation", the start-up area covers 119.5 square kilometers and includes Nanhui New Town, Lin-gang Equipment Industrial Zone, Xiaoyangshan Island and the southern part of Shanghai Pudong International Airport.

The development of the area should abide by laws and regulations concerning land, non-residential islands, ecological environment, and urban and rural planning, as well as the relevant requirements for the conservation and intensive use of resources. The area will use sea resources in accordance with national laws and procedures.

2. Establishing an institutional system with investment and trade liberalization as its core

Based on the opening-up and innovation measures implemented in Shanghai Pilot Free Trade Zone, Lin-gang Special Area will be supported in promoting liberalization and facilitation of investment and trade, focusing on freedom of investment, trade, capital, transport and employment.

4) Investment and Operation Facilitation Based on Fair Competition

Referring to the common practice of international free trade zones, Lin-gang Special Area will implement a foreign investment security review system, intensify opening-up in key areas such as telecommunications, insurance, security, scientific research and technical services, education and health, and ease restrictions on registered capital and investment methods to promote fair competition among various market subjects. Lin-gang Special Area will trial a registration system for commercial entities, respect the civil rights of market entities and conduct formal examinations of documents submitted by the applicants in order to fully implement the reform separating permits from business licenses. Lin-gang Special Area will establish tribunals to resolve international commercial disputes, and allow well-known foreign arbitration agencies and dispute settlement organizations to set up offices or branches in Lin-gang Special Area after registering with the judicial administrative department of the Shanghai Municipal Government and reporting to the judicial administrative department of the State Council for record. The offices or branches mentioned above will conduct arbitration in civil and commercial disputes arising in the fields of international trade, maritime affairs, investment, etc., and to support and guarantee the application and enforcement of interim measures such as property preservation, evidence preservation and action preservation by Chinese and foreign parties before and during arbitration in accordance with the law.

5) High-standard Trade Liberalization

Lin-gang Special Area will establish a physical fence zone and construct the Yangshan Special Comprehensive Free Trade Zone as a primary carrier to match the most recognized and competitive free trade zones in the world. Lin-gang Special Area will fully implement preferential policies of the China (Shanghai) Pilot Free Trade Zone, abolish unnecessary trade supervision, licensing and procedural requirements, and carry out policies ensuring trade liberalization and facilitation. For goods departing from and arriving at the physical fence zone, Lin-gang Special Area will explore and implement a supervision model mainly focusing on security supervision and reflecting a higher level of trade liberalization and facilitation to improve the efficiency of port supervision services and intensify its role as an international transit hub. Lin-gang Special Area will be supported in developing key industries with global competitiveness, and will explore appropriate customs supervision systems in accordance with the business of enterprises. Relevant regulatory policies shall be formulated under the leadership of the General Administration of Customs. Lin-gang Special Area will promote the liberalization of trades in service, accelerate the development of capital-technology-intensive trades in services such as culture, technological products, information and communication, and medical and health services, and explore cross-border e-commerce service models, and encourage cross-border e-commerce companies to establish international distribution platforms in the area. According to the reform process of oil and gas systems and industrial needs, eligible enterprises will be granted qualifications for crude oil imports in the area.

6) Cross-border financial administration system featuring payment convenience

On the premise that risks are under control, Lin-gang Special Area will, in accordance with laws and regulations, take internationally recognized financial supervision rules as examples to further simplify the procedures for cross-border renminbi business of high-quality enterprises to facilitate cross-border financial services. Lin-gang Special Area will conduct pilot projects for the integration of local and foreign currencies in free trade accounts and explore free capital inflow, outflow and exchanges in the area. Lin-gang Special Area will support enterprises in its area to carry out cross-border financial activities in compliance with prevailing international rules and regulations, and encourage financial institutions to provide cross-border services such as bond issuance, investment mergers and acquisitions, and centralized operation of funds to enterprises and non-residents in the area on the premise of legal compliance, risks under control and sustainable business. The funds raised abroad by enterprises in Lin-gang Special Area, the funds raised abroad and the income obtained from cross-border services by qualified financial institutions can be used independently for business and investment activities in Lin-gang Special Area and elsewhere abroad. Lin-gang Special Area will also support eligible financial institutions in conducting cross-border security investment, cross-border insurance asset management and other businesses. In accordance with the principles of the overall national plan, serving entities, risks under control and step-by-step progress, Lin-gang Special Area will gradually advance capital account convertibility. Lin-gang Special Area will be the first to try opening-up measures in the financial industry, actively implement measures such as relaxing limits on the proportion of foreign shareholdings in financial institutions and expanding the business scope of foreign financial institutions, support qualified foreign investors to establish financial institutions in accordance with laws, and ensure that Chinese and foreign financial institutions operate equally according to laws. Authorized by the State financial management departments, Lin-gang Special Area will use scientific and technological means to improve the level of financial services and regulatory capabilities, establish an efficient financial management mechanism, and effectively prevent financial risks.

7) Highly open international transport administration

Lin-gang Special Area will enhance its role as a global hub port, strengthen exploration in coastal transport, international ship registration and opening of international navigation rights, and improve its ability to gather and allocate international routes and cargo resources. The statutory inspection of ships shall be gradually relaxed. On the premise of ensuring effective supervision and risk under control, Lin-gang Special Area will treat domestic manufacturing ships registered for international transport at Yangshan Port of China as doing export business and will grant them export tax rebates. Lin-gang Special Area will further improve port of departure tax rebate policies, optimize the supervision process, expand the implementation effect of coastal container transshipment policies for Chinese-funded flag of convenience ships, and study the possibility of foreign-funded vessels doing coastal container transshipment business with Yangshan Port as an international transit port under the principle of reciprocity. Lin-gang Special Area will promote the expansion of air rights arrangements, including the fifth freedom rights, between Shanghai Pudong International Airport and the countries and regions involved in the Belt and Road Initiative (BRI) to attract airlines of those countries and regions to open stop routes, as well as support Shanghai Pudong International Airport to explore the air transit business. With Yangshan Deepwater Port, Shanghai Pudong International Airport and Luchao Port Railway Container Center Station as carriers, Lin-gang Special Area will promote the sharing of information on maritime, air and rail transport to improve the operational efficiency of multi-model transport.

8) Free and convenient personnel administration

Lin-gang Special Area will relax restrictions on the employment of high-end talents in modern service industries, and implement more open and convenient policies and measures in terms of personnel entry and exit and permanent residence of foreign talents. Lin-gang Special Area will establish a work permit system and a talent visa system for foreigners who work in the area. Qualified professionals in finance, construction, planning, design and other fields with overseas vocational qualifications will be allowed to provide services in the area after record-filing. Their overseas experience can be regarded as domestic working experience. Excepting examinations involving national sovereignty and security, foreigners will be allowed to attend qualification examinations in the area. Lin-gang Special Area will strengthen technical cooperation in areas with high technological content such as forensic toxicological judicial expertise and environmental damage judicial expertise. Lin-gang Special Area will provide more convenient visas and residence policies and measures for foreigners engaged in business, exchanges, visits and other economic and trade activities in the area. Lin-gang Special Area will formulate and improve introduction policies and management methods for foreign talents, and provide green channels for work permits and permanent or long-term residence procedures for high-level foreign talents and their teams working in th research and innovation. Lin-gang Special Area will also explore and implement a quota management system for foreigners and provide more convenient services for foreign talents who are urgently needed by registered enterprises in the area.

9) Orderly and secure cross-border flow of internet data

Lin-gang Special Area will construct complete international communication facilities, accelerate the construction of next-generation information infrastructure such as 5G, IPv6, cloud computing, internet of things and internet of vehicles, and improve broadband access capabilities, network service quality and application levels in the area to build safe and convenient internet data special channels. Lin-gang Special Area will focus on key areas, such as integrated circuits (IC), artificial intelligence (AI), bio-medicine, headquarters economy, to conduct a pilot security assessment of cross-border data flows and establish data security management mechanisms such as data protection ability authentication, data circulation backup review, cross-border data circulation, and transaction risk assessment. Lin-gang Special Area will pilot international cooperation rules, strengthen the protection of rights (such as patents, copyrights and business secrets) and data, and participate in and lead global digital economic exchanges and cooperation.

10) Tax regime and policies with international competitiveness

Special tax policies will be implemented for goods entering the physical fence zone from abroad and for goods trading and services among enterprises within the physical fence zone. Lin-gang Special Area will expand the application scope of value added tax (VAT) policy for service exports, and develop a new tax policy suitable for the development of foreign investment and offshore business. Enterprises in Lin-gang Special Area that meet the requirements and are engaged in the research and development (R&D) of core projects in key areas such as IC, AI, bio-medicine and civil aviation will be levied enterprise income tax at a reduced rate of 15 percent for five years after the date of establishment. Lin-gang Special Area will study and implement a subsidy policy of individual income tax burden difference for foreign talents, and explore a tax policy for pilot free trade accounts without causing tax base erosion and profit transfers.