State Council, China's cabinet, today posted the full document outlining the key reforms set to take off in the pilot free trade zone in Shanghai. Financial and trade reforms will speed up in the zone that is set to unveil on Sunday.
The free trade zone is intended to make the city a true international trade and financial center. According to the outline, the zone goes beyond greater liberalization of trade to take in investment and financial services, including free convertibility of the Chinese yuan trial with risks under control.
Convertibility of the yuan — allowing the currency to be freely bought and sold, and with it the movement of funds into and out of China — is the main obstacle preventing Shanghai from competing with global financial centers such as New York or London.
1. Banking services
• Allow the establishment of foreign-funded banks and joint venture banks. Allow the establishment of limited-license banks in the pilot zone.
• Allow Chinese banks to conduct offshore business.
2. Health and medical insurance
• Pilot establishment of foreign-funded professional health and medical insurance firms.
3. Financial leasing
• Scrap capital requirements for single aircraft or single vessel company subsidiaries set up by financial leasing companies.
l Allow financial leasing companies to offer factoring services related to the companies businesses.
4. Ocean cargo shipping
• Relax limits on foreign investment proportions in joint venture international shipping companies.
• Allow non-Chinese flag ships owned or controlled by Chinese companies to carry out container operations between Shanghai and other domestic coastal ports.
5. International ship management
• Allow wholly foreign-owned international ship management companies.
l Allow the establishment of foreign-funded international ship management company.
6. Value-added telecommunications
• Allow foreign-funded firms to run some value-added telecommunications business.
7. Game and amusement devices
• Allow foreign-funded companies to manufacture and sell game and amusement devices. Devices that pass content inspections can be sold on the domestic market.
8. Legal services
• Explore mechanisms for Chinese law firms to cooperate with overseas (including Taiwan, Hong Kong and Macau) counterparts.
9. Credit investigation
• Allow the establishment of foreign-funded credit investigation agencies.
10. Travel agencies
• Allow joint venture travel agencies to operate outbound tourism business, with the exception of Taiwan as a destination.
11. Employment agencies
• Allow the establishment of joint venture employment agencies, with foreign ownership up to 70 percent. Allow Hong Kong- and Macau-based service providers to establish wholly-owned employment agencies.
• Initial capital registration is lowered from US$300,000 to US$125,000
12. Investment management
• Allow the establishment of foreign-funded joint-stock investment companies.
13. Engineering design
• Eliminate the requirement for engineering design records for foreign-funded companies to provide services in Shanghai.
14. Construction services
• Eliminate limits on the Chinese and foreign proportions of joint construction projects in Shanghai.
15. Cultural performance agencies
• Scrap the shareholding cap on foreign performance broker. Allow wholly foreign-owned performance agencies to provide services to Shanghai.
16. Entertainment venues
• Allow the establishment of wholly foreign-owned places of entertainment within the free trade zone.
17. Education and vocational skills training
• Allow the establishment of joint-venture for-profit education and skills training providers.
• Allow the establishment of joint-venture for-profit vocational skills training providers.
18. Medical services
• Allow the establishment of wholly foreign-owned medical institutions.