Supporting Policies Rolled Out for Shanghai Free Trade Zone

October 3, 2013 Posted by China Briefing Reading Time: 4 minutes

Oct. 3 – With the view to better implement the “General Plan for the Shanghai Free Trade Zone,” the relevant authorities in China have rolled out various polices to support the development of the Shanghai Free Trade Zone (Shanghai FTZ). Detailed information can be found below.

Policies for the Banking Industry
On September 29, China’s Banking Regulatory Commission issued the “Circular on Relevant Issues concerning the Supervision of the Banking Industry in the Shanghai Free Trade Zone (yinjianfa [2013] No. 40),” which offers a package of policies to support the banking industry in the Shanghai FTZ.

According to the circular, Chinese-funded banks, policy-based banks and Shanghai banks are allowed to establish branches and upgrade their outlets in the Shanghai FTZ. Meanwhile, qualified Chinese-funded banks are permitted to conduct offshore business in the zone.

Moreover, foreign-funded banks will be encouraged to set up outlets, branches and Sino-foreign joint venture banks in the zone.

The circular also explicitly states that private capital will be encouraged to establish private banks, financial lease companies and consumer finance companies that are responsible for their own risks in the zone.

Besides, financial institutions in the zone will be encouraged to develop the cross-border financing and investment business, including:

Financing for bulk commodities trade
Financing for supply-chain trade
Financing for offshore shipping
Financing for the modern services industry
Loans for cross-border mergers and project
Cross-border asset management
Fortune management business
Real estate investment trust

In addition, the circular simplifies the entry procedures for banks and improves the supervision and service system at the same time.

Policies for the Insurance Industry
In another move, China’s Insurance Regulatory Commission issued a series of policies to support the development of the insurance industry in the Shanghai FTZ on September 29. Specifically:

Supporting the establishment of foreign-funded specialized health insurance institutions in the Shanghai FTZ;
Supporting insurance companies to set up branches and to conduct RMB cross-border re-assurance business in the Shanghai FTZ;
Supporting insurance institutions in the Shanghai FTZ to conduct pilot overseas investment projects;
Supporting internationally well-known insurance intermediary agencies as well as social organizations and individuals engaged in the re-assurance business to conduct relevant business in the Shanghai FTZ;
Supporting Shanghai with regards to the shipping insurance business;
Supporting insurance companies to innovate insurance products; and
Supporting Shanghai to improve the insurance market system.

Policies for the Capital Market
With the view to deepen the capital market reform, China’s Securities Regulatory Commission announced on September 29 that it will deepen the capital market reform, expand the scope of opening-up, and strengthen the financial support to the Shanghai FTZ through the following five measures:

Approving the plan to build an international crude oil futures platform, through which foreign investors are able to participate in the domestic futures trading;
Supporting qualified entities and individuals in the Shanghai FTZ to invest in both the domestic and overseas securities and futures markets;
Allowing overseas parent companies of the enterprises in the Shanghai FTZ to issue RMB bonds at the domestic market;
Supporting securities and futures institutions to register and set up specialized subsidiaries in the Shanghai FTZ; and
Supporting the securities and futures companies in the FTZ to conduct over-the counter trading of bulk commodities and financial derivatives for domestic clients.

In addition, the country’s Ministry of Culture has issued a circular regarding the supporting polices for the culture industry in the Shanghai FTZ, the circular provides that foreign-funded performance institutions and entertainment venues will be allowed to set up in the zone. Moreover, foreign game machine (video game console) manufacturers will be eligible to sell their products in China upon approval from the Ministry of Culture.

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