The Shanghai Pilot Free Trade Zone is expanding to include Lingang New Area. It will offer businesses tax cuts, duty exemptions, and access to other beneficial policies to attract greater talent settlement.
China’s State Council, the cabinet, approved the establishment of a new area of the Shanghai Pilot Free Trade Zone (FTZ) – the Lingang New Area – on 6 August. It is intended to be a “special economic functional zone with strong international market influence and competitiveness”.
Shanghai is setting up a special development fund to inject at least US$14.2 billion to construct the Lingang New Area over the next five years, while tax breaks, such as a preferential rate of 15% on corporate income tax (CIT), and import duty exemptions will be offered to attract high-tech companies, talents, and infrastructure.
Lingang is located on the southeast edge of Shanghai and is already home to over 500 projects, which include the presence of leading foreign companies like Tesla, General Electric (GE) and Siemens AG.
Under the plan, Lingang New Area will almost double the size of the Shanghai FTZ with a start-up area of 119.5 km2which can be divided into three parts – 76.5 km2 in the southern part of Lingang area, 24.7 km2 in the south area of Pudong International Airport and 18.3 km2 in Lesser Yangshang Island.
The Lingang New Area will facilitate freer activities in trade, investment, finance, talents and information. The following development goals have been set:
- By 2025, the area will have a relatively mature institutional system of investment and trade liberalisation and facilitation and will build a batch of highly functional platforms; and
- By 2035, it will be built into a special economic function zone with strong global market influence and competitiveness, helping China further integrate with the global economy.
The new area will remove unnecessary trade regulation, licensing and procedural requirements. It will support domestic and foreign investors to set up joint innovation funds and cooperate on major scientific research projects. Related funds will also be allowed for use in the Yangtze River Delta region.
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