3-year local rules suspension in pilot zone
Local regulations on foreign investment in Shanghai’s free trade zone will be suspended for three years from next Tuesday, in line with the state’s temporary adjustments on related laws to ease legal barriers for foreign participants.
The pilot free trade zone is due to open on Sunday.
The Shanghai People’s Congress, the city legislative body, said local regulations in the zone would be further adjusted if they were inconsistent with national laws and regulations and the overall plan for the zone. The suspension aims to maintain the unity of the national legal system and to push forward with the construction of the free trade zone, according to the SPC Standing Committee.
China’s top legislature last month authorized the State Council to suspend administrative approvals for foreign-funded enterprises, Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures in the free trade zone, in a move to decentralize government power as part of the reform and opening up policy.
“The management system, operating mechanism and supervision system in the free trade zone will be quite different and will inevitably have conflicts with the current regulations,” said Ding Wei, director of the Legislative Affairs Commission of the SPC.
“The decision to adjust local regulations will lay a legal foundation for the introduction of ground-breaking reforms,” Ding said.
Covering a total of 28 square kilometers in the Pudong New Area, the free trade zone is expected to be a testing ground for major policy reforms involving government function transformation, trade facilitation and financial innovations such as free yuan convertibility and liberal interest rates and foreign exchange.
Wang Xinkui, director of the city’s Counselor’s Office and the city’s WTO Affairs Consultation Center, said at a forum yesterday that the pilot free trade zone is not about preferential policies but is a place for the exploration of institutional innovation.
Wang said the transformation of regulatory methods from administrative approval to management through a registration system will be a major part of reforms within the zone.
Chinese Premier Li Keqiang said earlier that a negative list approach will be explored in the free trade zone and priority will be given to easier investment and greater openness.
The establishment of the pilot free trade zone in Shanghai has raised hopes that China will deepen its economic reforms as part of a broad strategy to shift the world’s second-largest economy toward a mode driven by domestic consumption, replacing investments and exports.
On Sunday, the Shanghai government will publicize some detailed rules for the zone.