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August 20, 2022

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Lingang counts investment and trade among key growth drivers

Lingang has seen tremendous transformation in the past three years since the establishment of the special area of the China (Shanghai) Pilot Free Trade Zone, thanks to more freedom in trade and investment, and more facilitation in transport, employment and data sharing.

The Lingang Special Area celebrates its third anniversary today.

Expected to be a new area that is open and innovative, Lingang is known for a smart ecology that is friendly to living and doing business.

A cutting-edge industrial cluster with key breakthrough technologies has been established in the area after three years’ development.

Moreover, the coastal town at the southeast tip of Shanghai has also created a world-class, market-oriented legal and business environment.

Tesla, which established its first Gigafactory outside the United States three years ago in Lingang, is a case in point to illustrate the charm of the special area. Now the factory has a supply chain localization rate of more than 95 percent, and 99.99 percent of its employees are Chinese.

“We understand that Shanghai continues to improve its business environment,” said Wang Wenjia, director of Tesla R&D engineering in Asia Pacific Region.

“Shanghai Gigafactory is a typical example of China’s reform and opening-up and Shanghai’s openness and inclusiveness.”

In terms of free trade, the Yangshan Special Comprehensive Bonded Area has been built. Innovative business forms, including bonded R&D and bonded manufacturing, are being fostered.

In terms of investment, the first financial management joint venture with foreign capital and the first fintech company wholly owned by a multinational financial group have been set up in Lingang. Also, high-level Sino-foreign cooperation has been implemented in the educational sector.

In terms of finance, Lingang has taken the lead in a pilot project for high-level opening-up of cross-border trade and investment, as well as foreign exchange management reform. The project relaxes the requirements for matching cross-border investment and financing, while the scale restriction of overseas loans of non-financial enterprises is also lifted.

Lingang also is undertaking a pilot project to integrate local and foreign currencies into a cross-border capital pool and enable cross-border transfer of credit assets such as bank trade finance assets and non-performing loans.

In terms of transport, Lingang took the lead in developing the coastal carriage business of non-national flag ships, built the Yangshan international transit and LCL (less than-container load) service center and established a Northeast Asia empty container exchange center.

In 2021, Yangshan Port handled 22.8 million TEUs (twenty-foot equivalent units) of containers, helping Shanghai become the world’s biggest port for container throughput for 12 consecutive years.

In terms of employment, Lingang offers work and residence permits for foreign talent for up to five years and directly recommends foreign top-notch talent to apply for permanent residence and a “green channel,” which will halve the time for examination and approval from 180 workdays to 90.

In terms of data facilitation, Lingang have completed the security assessment of the first cross-border data flows by a foreign automaker in China, and set up a data storage center for intelligent vehicles.

Meanwhile, a 15 percent enterprise income tax rate for four key industries — integrated circuit, artificial intelligence, biomedicine and civil aviation — is one of the preferential policies to drive innovation breakthroughs in Lingang.

A total of 132 enterprises have been certified as qualified, and the accumulated tax reduction amount is about 1.2 billion yuan (US$180 million), according to Lingang Special Area Administrative Committee.

“The preferential 15 percent tax rate not only allows businesses to enjoy the policy dividend from settling in Lingang, but also shows us the government’s determination to support the development of relevant industries,” Qian Qianying, executive director of finance at SenseTime Technology, told Shanghai Daily.

Qiao Jingwen, chief of Lingang’s finance division, said that even start-ups, if they meet the four key industries category criteria, will be able to enjoy the preferential tax rate.

Other policies include a tax rebate policy for international shipping lines and a value-added tax exemption for logistics and warehousing services in the Yangshan special comprehensive bonded area.

Compared with Singapore, Dubai and other port cities, Lingang not only has world-class ports but also a vast market in the Yangtze River Delta region and the vast hinterland of the Yangtze River Basin, said Hu Yijian, president of the Institute of Public Policy and Governance of Shanghai University of Finance and Economics.

“Lingang needs to be more innovative in its tax policy for offshore trade to telegraph greater openness to the outside world and to achieve higher-quality economic development,” said Hu.


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