The new free port within the China (Shanghai) Pilot Free Trade Zone in Shanghai will focus on the development of offshore trade and finance, industry insiders said, adding that the plans are now gathering speed.
China Securities Journal, the official newspaper of Xinhua News Agency, said on Monday that the free port in Shanghai will carry out supervision "within the borders but outside the Customs", which is in essence the same principle adopted by other free ports around the world. It would also take steps to develop offshore trade and finance and to facilitate the free flow of commodities, capital and talent.
A free port, which is a form of free trade zone, is set up within a country or a region's borders but outside the customs department. It is open to all commercial vessels on equal terms. Goods may be unloaded, stored and shipped without payment of customs duties here.
The Ministry of Commerce spokesperson Gao Feng said in late October that the ministry was coordinating with the Shanghai municipal government and other related departments on the setting up of the free port.
In terms of the free flow of commodities, all the companies registered within the free port are not required to undergo checkups or examination at the customs, inspection and quarantine departments.
Only priority goods will need a sampling inspection, according to China Securities Journal.
For free flow of capital, the local authorities will improve foreign exchange management systems, adjust tax incentives, complete the free trade zone accounting system, and accelerate the development of offshore renminbi business.
The free port is likely to reduce the corporate tax for companies registered within the area, it said.
Foreign expatriates working in the free port are likely to get permanent residency status in China. For non-local residents working in the free port area, local authorities will come up with favorable policies to help them get household registration in Shanghai, according to the newspaper.
Officials at the Shanghai FTZ declined to comment on the detailed plans reported by China Securities Journal.
Chen Bo, executive director of the FTZ Research Center at the Huazhong University of Science and Technology, said that it was more likely to see a breakthrough in the talent policies, while the policies regarding foreign exchange management would need further confirmation.
"If offshore trade is allowed, a large chunk of the international commodity trading, especially from East Asia, will come to Shanghai," he said.
"As the offshore trade develops, opportunities will also be created in the transport and storage of bulk commodities, the establishment of distribution centers and the development of offshore finance," he added.