The implementation plan for the Qianhai & Shekou area within the Guangdong pilot Free Trade Zone was recently officially released. In the future, the Qianhai & Shekou area will focus on 10 main tasks, including building a legal regulation prototype, coming up with an international trade framework, liberalizing service trade between Shenzhen and Hong Kong, clustering top-tier industries, reforming and innovating the financial sector, as well as forming a fulcrum for the “One Belt, One Road” initiative. The seven key terms below serve as a start guide to help you understand the implementation plan for the Qianhai & Shekou free trade area.
1. First Mover in Governance by Law
The Plan seeks to promote collaboration between law firms in Qianhai, Hong Kong and Macau, to develop a unique strategy to transform Qianhai into a city that serves as a focal point for professional legal services, as well as to attract top local and foreign law firms to establish presences in the area. At the same time, the solution also delves into the training of professional mediators in Hong Kong, Guangdong and Macau, and for all three jurisdictions to recognize accredited mediation certificates issued by their counterparts. It also looks at the possibility of providing mediation via the Internet, to make it convenient for parties involved in mediation to choose Qianhai as their preferred location for commercial dispute resolution.
In addition, the implementation plan for the establishment of an operational center of intellectual property rights in the Qianhai & Shekou area, to expedite the establishment of an intellectual property rights protection and support center, as well as a one-stop platform for the resolution of intellectual rights disputes, including those that involve intellectual rights applications, rights protection and support, dispute mediation, administrative law enforcement and judicial proceedings.
2. Connecting to the International Trade System
The Plan studies and learns from the experiences of developed nations in setting a “negative list” (i.e. what is not allowed), further relaxing the restrictions for foreign investors entering the local market, expanding the business of scope in opening up the service market, and gradually compile a short list of international standards.
In terms of administrative review and approval, the Plan develops and announces the list of administrative rights of the Qianhai & Shekou area. Adjustments, simplifications, abolishment and the combination of administrative review and approval procedures will be carried out, in order to achieve the vision of “one stop processing”.
The Plan also explores a new “internet+” administrative service model to provide all-encompassing comprehensive services. Through a pilot programme in the tax system, computerized automatic alignment can be achieved, where part of the business will be allowed to be submitted through the computerized system, making it taxation services more accessible for taxpayers. At the same time, a website for the online reporting of administrative review and approval will be rolled out with the launch of the Qianhai“e Station Service” APP, allowing administrative work to be completed via mobile internet.
Based on the new model of foreign investment management, procedures to register a new company will be simplified for Hong Kong and Macau investors. A registered capital subscribed system will be established, and the joint annual inspection will be changed to an annual declaration of consolidated information.
3. Collaboration Between Shenzhen and Hong Kong
The Plan explores the possibility for professionals who have obtained their licenses to practice in Hong Kong to provide professional services directly to companies and residents in the free trade zone, once they have declared their licensing status. This would be especially welcomed by companies providing professional services such as legal, architectural, accounting and auditing, advertising, credit assessment, travel agencies, head-hunting and other services, who are one of the pioneers entering the Qianhai & Shekou area.
In order to facilitate the movement of key personnel between Shenzhen and Hong Kong, the Plan explores opening a counter in Qianhai to process business visa applications. This will make it easier for professionals within the zone to apply for a business visa when they need to travel to Hong Kong. The Plan also explores relaxing the criteria for small Hong Kong vehicles to enter the Qianhai & Shekou area and opening a green channel for them.
The Plan promotes the establishment of an Asia-Pacific Science and Technology Innovation Centre, jointly undertaken by Shenzhen and Hong Kong. Such a centre will help attract international organizations in the field of science and technology to set up their base in the zone, support scientific innovations with the Shenzhen and Hong Kong Innovation Industry Fund, promot cross-border and cross-industry collaboration, as well as establish an international technology trading and transaction platform and a venture capital financial service platform.
4. Clustering of Top-tier Industries
The Plan suggests grouping top-tier industries to boost headquarter economics, platform economics or the emerging service economy.
The Plan facilitates the cross-border collaboration of e-commerce operators, the Qianhai & Shekou free trade area will coordinate the development of a pilot programme for Qianhai e-commerce importers and exporters and their online and offline businesses in order to create a seamless business experience for cross-border e-commerce operators that account for hundreds of billions of dollars in revenue.
The Plan aims to build a bonded global commodity trading center based on innovative business models such as “Hong Kong-style management” and the “O2O” model, where the warehouse is located in the bonded port and the display stores located in the zone, with an emphasis on the Qianhai fresh produce trading center and direct sales and logistic center for imported consumer products.
The area will take the lead in setting up a department to oversee the needs for financial leasing in Qianhai, an association of Shenzhen financial leasing business and a one-stop service platform to facilitate financial leasing in the Qianhai & Shekou area, in order to build a harmonious business environment for financial leasing in Shenzhen and Hong Kong.
5. One Belt, One Road
The Plan suggests that the zone should ride on the convenience of the “One Belt, One Road” initiative to strengthen its participation in business and trade in the South Asia-Pacific region, explore the possibility of building a center for the trading of ocean resources, set up a marine new energy cooperation fund and other industrial cooperative platforms, and achieve marine resource optimization in areas included by the “One Belt, One Road” initiative.
The Plan supports qualified enterprises in carrying out green investments, acquisitions and mergers, bond and securities investments, and joint investments in countries along the “One Belt, One Road” initiative, and studies the possibility of setting up investment funds for a range of industries. These would encourage Chinese enterprises to see the Qianhai & Shekou area as a platform to organize business-oriented tours for business investment groups, with the objective of constructing integrated business parks in countries and regions along the “One Belt, One Road” initiative, forming a new economic model that is a spillover from that of the Guangdong and Hong Kong economic model, characterized by “economic enclaves, connectivity of ports, and cross-border financing”.
The Plan aims to scaffold a platform to promote investment in the Chinese and ASEAN markets, as well as to support top leading enterprises in major national industries identified under the “One Belt, One Road” initiative in setting up their headquarters and establishing financing, trading and professional service partners etc. in Qianhai.
The Plan also seeks to establish bilateral pilot collaborative programmes between China and countries along the “One Belt, One Road” initiative, in the fields of customs, inspection and quarantine, certification and accreditation, standards of measurement, statistical information and other areas, being the first in implementing a new working model that involves regulations in two-way connectivity and supervision.
6. A Port That Serves as an International Hub
The Plan seeks to launch a pilot scheme to review the ship registration systems and to establish a port for “China Qianhai Ships”. It will attract shipping companies, ship brokers, shipping insurers, maritime arbitrators and other key shipping-related businesses to congregate in the Qianhai & Shekou area, in order to accelerate the establishment of an international shipping hub. The entry barriers for foreign shipping companies will also be lowered, allowing them to enter the international shipping agency business as long as they partner with local companies. The maximum percentage of shares held by foreign also investors can be further relaxed to 51 percent.
The Plan also aims to develop a yacht base and trading center along the bay area and to study the possibility of establishing an operational base for seaplanes; to study the tax-free shopping policies for exiting travelers to complement the development of the cruise and yacht industry, to set up duty-free shops at the base port where cruise ships dock, to explore the likelihood of leisure packages to all main ports in the world, in order to transform the Qianhai & Shekou area into Asia-Pacific’s biggest home port base for cruise ships.
Aside from that, according to information from the China Merchants Group, the Qianhai & Shekou area is also planning to invest in an overseas marine network, to transform the area into the best-equipped marine works headquarters in the world, with the objective of generating hundreds of billions in revenue through this industry.
7. Innovation in Financial Services
The Plan sets innovative pilot schemes to liberalize the flow of domestic and foreign, onshore and offshore, as well as local and overseas currencies, and to hasten the process of setting up fully-licensed securities companies and fund investment companies that are co-invested in by Shenzhen and Hong Kong.
At the same time, the Plan promotes the use of RMB as the main currency in major transactions completed in Qianhai, Hong Kong and Macau as well as other countries, including investment valuations and account closure. The Plan aims to include Qianhai and Shekou businesses into the pilot scheme of the macro and prudent administration of foreign debts and the pilot scheme for cross-border RMB loans.
In promoting two-way RMB financing channels, the Plan explores the possibility to broaden the investment channels for offshore RMB funds in Hong Kong and Macau, as well as supports the foreign parent companies of Qianhai and Shekou companies to issue RMB bonds in China. The Plan also proposes expediting the development of an innovative financial industry cluster.
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