Expert from Shanghai University of International Business and Economics: The Lingang New Area needs to enrich the practical content of expanding special economic function zones
Since the 4th anniversary of the establishment of the new Lingang area of the Shanghai Pilot Free Trade Zone, centering on the guiding spirit of the "five important", we have promoted in-depth reform with high-level opening up, issued nearly 300 policies, and formed more than 100 innovative, leading and integrated cases of institutional innovation. Economic data such as regional gross domestic product, import and export volume, fixed assets investment, foreign investment absorption, tax revenue, cross-border RMB settlement, etc. have maintained rapid growth.
Against the backdrop of a complex international development environment and the restructuring of the global value chain, the Lingang New Area still faces some pain points and bottlenecks in playing an important role as a special economic function zone. It is necessary to continuously enrich and expand the practical content of the special economic function zone, gradually transform from opening up the flow of commodity factors to deeper, broader, and more powerful institutional openness, including rules, regulations, management, and standards, and become a "growth pole" and "engine" of high-quality development, creating a "power source" with international market influence and competitiveness.
"Better optimization of business environment"
The Lingang New Area aims to promote institutional innovation and opening up around the theme of "greater efforts for experimentation, higher levels of opening up to the outside world, and greater promotion of development". It should take the lead in conducting greater stress tests in areas such as fair competition, cross-border data flow, cross-border offshore finance, and intellectual property protection, providing practical experience for China's application to join the Comprehensive and Progressive Trans Pacific Partnership Agreement and the Digital Economy Partnership Agreement.
By comparing with relevant high standard economic and trade rules, efforts can be made to conduct pressure tests on trade and investment rules from the border to the post border in various fields such as expanding market access for the financial and telecommunications service industry to the outside world, being competitive neutral, labor, environment, transparency, government procurement, and building pilot projects for cross-border data flow.
Over the past four years, Lingang New Area has gradually become a gathering place for high-quality elements both domestically and internationally, with a total of 1589 signed projects and an investment of 835.7 billion yuan. Over 2400 foreign enterprises have been registered. Involving 502 key projects in the cutting-edge technology industry, with an investment of 563 billion yuan; The number of specialized, refined, and innovative "little giant" enterprises has increased from 1 to 25, from less than 20 to 313 at the municipal level, and from 254 to 1323 high-tech enterprises. Since 2020, there have been 261 outward direct investment projects, with a cumulative outward investment of 4.985 billion US dollars, making it an important investment and financing platform in China.
Next, in order to better optimize the business environment, a series of optimization measures for the business environment can be carried out according to local conditions by benchmarking the service trade restriction index and digital service trade restriction index published by the Organization for Economic Cooperation and Development.
At the same time, we will attempt to launch a negative list management model in the Lingang New Area that is open to the service industry of the contracting parties to the Regional Comprehensive Economic Partnership Agreement. In the fields of medical services, consulting services, telecommunications services, legal services, education services, etc., foreign investors are allowed to enter the Chinese market through wholly-owned or joint ventures, provided that certain restrictive conditions or requirements are met.
In addition, it is necessary to pay attention to the Investment Facilitation Agreement successfully negotiated by the World Trade Organization in July 2023. It emphasizes transparency in investment measures, streamlining administrative procedures, and assisting investors in conducting preliminary research, domestic regulatory consistency, establishing a domestic supplier database, and facilitating investment.
"Play special economic functions"
As the first special comprehensive bonded zone in China, Yangshan Port Special Bonded Zone is an important carrier for leveraging the special economic functions of the Lingang New Area.
In recent years, in order to build a hub for order and fund collection in the global trade operation center, the Lingang New Area has built cross-border fund pools for 55 enterprises, with a cumulative cross-border RMB settlement volume of 2669.449 billion yuan and a cumulative cross-border foreign currency settlement volume of over 40 billion US dollars.
The next step is to fully utilize the Shanghai Pilot Free Trade Zone, the first platform in the country to support trade authenticity verification using overseas data - the "Offshore Pass" platform. Drawing on the practices of Hainan Free Trade Port, Suzhou, and Qingdao Pilot Free Trade Zones, we should integrate overseas customs declaration data, international shipping data, and port loading and unloading data to provide convenience for commercial banks to provide trade authenticity verification services. Under appropriate conditions, institutional reforms such as tax and fee reductions can also be carried out to comprehensively enhance competitiveness against other offshore trade centers.
As an important gathering place for large multinational corporations, the Yangshan Port Special Comprehensive Bonded Zone should further play an important role in processing and manufacturing centers, research and development design centers, testing and maintenance centers, logistics distribution centers, sales service centers, as well as new models and formats of cross-border e-commerce, digital trade, high-end service industries, etc.
Under the new situation, there is a high demand for the development of new offshore businesses such as offshore transfer buying and selling, global procurement, commissioned overseas processing, contracted overseas procurement of engineering projects, and import of remanufactured products. Under the premise of being able to be opened up and managed, efforts should be made to improve the rational allocation of global resources at the manufacturing headquarters.
"Promoting innovation in service trade"
At present, the Lingang New Area has initially formed a system with "five freedoms and one convenience" as its core content in the field of goods trade. The Yangshan Port Special Comprehensive Bonded Zone has pioneered a customs supervision system in the field of goods trade, represented by "first line" clearance, "second line" unilateral declaration, and no account books in the area. It has eliminated unnecessary trade supervision, licensing, and procedural requirements, and implemented special tax policies for goods entering the physical fence area from overseas, goods transactions and services between enterprises in the physical fence area. Since 2020, the total import and export volume has grown at an average annual rate of 44%; In the first half of this year, it grew against the trend by 54.6%.
Next, accelerate the transformation and upgrading from manufacturing enterprises to regional settlement headquarters, and focus on promoting the reform and innovation of the service trade system. The service trade in Lingang New Area has increased from 1% of the city's total in 2019 to 4.1% in 2022, reaching $10.04 billion, a year-on-year increase of nearly 40%; Offshore trade has also achieved a doubling year by year, from 1.26 billion US dollars in 2021 to 4.68 billion US dollars in 2022. The growth rate in the first half of this year exceeded 70%, reaching 4.953 billion US dollars. However, it also faces a relatively lagging high-end productive service industry, and most of the "bottleneck" links occur in the service-oriented manufacturing sector.
In view of this, it is necessary to accelerate the implementation of domestic regulations on service trade and multilateral negotiations on e-commerce under the WTO framework, further reduce post border restrictions on foreign investment in the service industry, strengthen the connection between domestic systems and international rules, and improve the level of liberalization and facilitation of service trade and the standardization and transparency of domestic regulations.
In addition, there is still a certain distance between the Lingang New Area and the positioning goal of building a high-level digital trade hub port. For example, "cloud services" are difficult to achieve domestic and international interoperability, copyright restrictions prevent the introduction of digital content services through mirror caching into China, basic telecommunications services have not yet been liberalized, and foreign direct investment in data services is still subject to access restrictions.
In the new situation, the pilot program for cross-border data flow should not only focus on mode and technological innovation, but also pay more attention to institutional innovation. We actively engage in innovative exploration around assisting in the smooth implementation of data export security assessment mechanisms, exploring personal information protection certification mechanisms, optimizing standard contracts that conform to trade scenarios, promoting transparency in data export evaluation standards, and establishing a high-frequency outbound whitelist system for data of the same subject and type.
"Strengthen regional linkage and collaboration"
In order to achieve greater innovation results, regional gradient linkage innovation can be actively promoted in stages and steps:
The Yangshan Port Special Comprehensive Bonded Zone and Lingang New Area are designated as open innovation linkage zones, while the Pilot Free Trade Zone and Pudong New Area's high-level reform and opening up to create a leading area for socialist modernization construction are designated as open innovation expansion zones, gradually extending to Shanghai and even the Yangtze River Delta Free Trade Zone as open innovation radiation driving zones.
Through the construction of a unified regional market, reasonable supply chain layout, and industrial collaboration, we will accelerate the realization of higher quality integrated development in the Yangtze River Delta.
At present, the integration of customs clearance in the Yangtze River Delta has increased the cost of customs clearance for imported goods such as biopharmaceutical research and development. There are also problems such as limited linkage between new models and business models such as bonded maintenance, bonded testing, and bonded research and development in the comprehensive bonded zone and free trade pilot zone. It is urgent to improve the "single window" service function of international trade and the cross regional supervision ability of relevant functional departments.
The Lingang New Area has the conditions to utilize a comprehensive multimodal transportation hub, and can focus on promoting the implementation of the "Shanghai Implementation Plan for Promoting the Development, Optimization and Adjustment of Multimodal Transportation Structure" issued in 2022. It actively participates in the construction of the multimodal transportation standard rule system, improves the carrying capacity and connection level of multimodal transportation, and optimizes the organizational models of multimodal transportation such as river sea intermodal transportation, river sea direct transportation, and container sea rail intermodal transportation.
We need to accelerate the mutual inspection and recognition of qualifications and qualifications among freight enterprises and personnel in the Yangtze River Delta, fully leverage the hinterland function of the Lingang New Area as an important cargo distribution center in the Yangtze River Delta and even the Yangtze River Economic Belt, enhance the function of Yangshan Port as a global hub port, and improve the gathering and allocation capacity of international routes and cargo resources.
In summary, the Several Opinions on Supporting the Deepening and Expanding of Special Economic Functions in the Lingang New Area of China's Pilot Free Trade Zone and Leading the Way in High Quality Development require the construction of the Lingang New Area into a higher level of openness, a better business environment, and a stronger radiating effect. On the new journey, we need to further conduct pressure tests on international economic and trade regulations based on elevation standards, fully leverage the economic functions of the Yangshan Port Special Comprehensive Bonded Zone, focus on promoting service trade openness, strengthen regional linkage and coordination, and create a new situation of high-level institutional openness.
