The FTZ spans almost 29 sq km in Shanghai’s Pudong New Area
including the Waigaoqiao duty-free zone and the Yangshan Port. It is believed
it may eventually expand to cover the entire Pudong district which covers
1,210.4 sq km of land.
In all, 18 industries are to be liberalized. The government
has grouped these industries into six focus areas for the FTZ:
1.
Financial industry
2.
Shipping and logistics
3.
Commercial trade
4.
Professional services such as law and
construction
5.
Culture and entertainment
6.
Social services including education and
healthcare
According to various sources, China’s Ministry of Culture
also plans to remove a 13-year old ban on video game console manufacturing and
sale for companies registered in the zone. Microsoft has noted great interest
in this opportunity.
For the logistics and transportation market, the FTZ is
supposed to relax the proportion of foreign companies in joint ventures within
international shipping enterprises and also allow for wholly foreign-owned
shipping management enterprises to be established within the zone.
Another interesting prospect was noted in a recent article
from the South China Morning Post. The newspaper interviewed the chairman
of China Eastern Airlines which is based in Shanghai. The airline hopes to
obtain approval for a cross-border ecommerce business in the FTZ. Because of
the tax breaks offered within the FTZ, the airline anticipates an increase in
purchases by consumers for foreign products. According to the chairman, “We
have plans to take advantage of the FTZ to bolster our logistics business. With
the establishment of the zone, airfreight will become one link in the chain of
our comprehensive logistics business.”
Within the FTZ is Pudong International Airport. Much like
other Chinese airports, Pudong has witnessed declines in cargo. However, the
benefits of such an economic area could be beneficial to not only the airport
but also to such air cargo providers as China Cargo Airlines, Lufthansa Cargo
and UPS, all who operate independent terminals at the airport.
Sea shipments also will likely benefit as well. Waigaoqian
and the Yangshan deep water port, part of the Port of Shanghai operations, are
also included in this zone.
While critics of the Shanghai FTZ note a certain vagueness
of “liberalization” rules, others have made comparisons to a new “Hong Kong”. Regardless, the potential for this zone may
allow for further expansion plans to other locations such as the economic zone
in Qianhai, Shenzhen.