Summary on Shanghai's Policies in Relation to Encouragement of Foreign Investment during Period of Covid-19 Epidemic

Preface

According to relevant media report, the actual foreign investment to Shanghai in the first quarter of this year amounted to 4.669 billion US dollars, representing a 4.5% YoY increase. In the meantime, ten (10) new foreign-invested regional headquarters of multinational corporations and five (5) foreign-invested research and development centers settled down in Shanghai.  While the rest of the world almost enter into economy stagnation during the period of Covid-19 epidemic, and our national GDP growth of the first quarter is only -6.8%, why has Shanghai stood out on introducing foreign investment?  We understand that it is closely related to Shanghai’s continuously deepening its open-up to the outside world. Our team would like to brief Shanghai’s policies relating to foreign investment introduction of this year, thus to provide some reference for those foreign investors who intend to make investment in Shanghai.

1.上海市贯彻《长江三角洲区域一体化发展规划纲要》实施方案

Shanghai's implementation plan for implementing the Yangtze River Delta Regional Integration Development Plan

To further perform Shanghai’s core-city function and play its leading role, and to better promote the implementation of national strategies, Shanghai's implementation plan for implementing the Yangtze River Delta Regional Integration Development Plan was jointly promulgated by Shanghai Municipal CPC Committee and Shanghai Municipal Government on January 10, 2020.

The main contents of the Plan in relation to foreign investment include but not limited to: proactively exploring the full participation of qualified foreign investors into various factor markets of Shanghai; vigorously attracting the presence of international financial organizations, headquarters of large financial institutions at home and abroad to build up global asset management centers; optimizing development environment of shipping to enhance high-end shipping service capability;  vigorously developing high energy level of headquarters economy, supporting the existing MNC headquarters to enhance energy levels and to extend functions; implementing the system of pre-entry national treatment plus a negative list management for foreign investment, improving the management mode of negative list for cross-border service and reducing restrictions thereof; gradually relaxing foreign access to financial sector, expanding cross-border transactions of intellectual property rights, supporting those high level foreign talents who hold permanent residence IDs to found Sci-tech enterprises; focusing on key areas such as Demonstration Area of Ecological Green Integration Development In Yangtze Delta, constructing high-level new areas in Shanghai Pilot Free Trade Zone; focusing on the development of headquarters economy, expanding investment liberalization, deepening trade liberalization, promoting capital free flow and executing employment liberalization, etc.; constructing high-quality Shanghai Hongqiao CBD, making full effort to build the open hub, promoting the construction of a new open and shared world trade center platform, creating a business environment with international competitiveness.

2.《关于支持中国（上海）自由贸易试验区临港新片区发展征管服务措施的通知（试行）》(沪税函〔2020〕2号)

Notice on Supporting the Development of Tax Collection and Management Services for Lingang New Area of China ( Shanghai ) Pilot Free Trade Zone (for trial)

Shanghai Branch of State Administration of Taxation released Notice on Supporting the Development of Tax Collection and Management Services for Lingang New Area of China ( Shanghai ) Pilot Free Trade Zone (for trial) on January 16, 2020, in which some seventeen (17) specific service measures are proposed, and following are preferential policies in relation to foreign investment: for those small scale taxpayers which have no taxable income and verification of invoice type, some taxes are exempted from declaration; simplifying relevant procedures relating to external payment of service trade, implementing the electronization on tax filing of external payment relating to such projects as service trade; proactively promoting those commercial enterprises registered in Lingang New Area to file as tax rebate shops, supporting to carry out facilitation pilot of drawback "immediate refund upon collection"; benchmarking the most excellent business environment standard in the world, starting from reducing tax payments and compressing tax period, to implement the optimized measures on tax business environment in the new area firstly and to gradually replicate and promote them across the whole city.

3.《关于进一步加快推进上海国际金融中心建设和金融支持长三角一体化发展的意见》

Opinions on Further Expediting the Building of Shanghai into an International Financial Center and Financial Supports for the YRD Integrated Development

To further increase financial support for the construction of Lingang New Area of Shanghai Pilot Free Trade Zone and the integrated development of the Yangtze River Delta (YRD) region, Opinions on Further Expediting the Building of Shanghai into an International Financial Center and Financial Supports for the YRD Integrated Development were jointly promulgated by People’s Bank of China, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange, Shanghai Municipal Government on February 24, 2020.

According to the Opinions, the pilot scheme on finance will be proactively promoted in Lingang New Area, the opening-up of Shanghai's financial industry to the outside world will be accelerated at a higher level, financial supports will be given for the YRD integrated development. Based on such guidelines, some thirty (30) specific measures were formulated as follows: exploring in Lingang New Area the possibility of eliminating the special account for RMB capital funds in foreign direct investment, and launching the pilot scheme of RMB and foreign currency integrated cross-border capital pool; supporting qualified commercial banks in establishing wealth management subsidiaries in Shanghai, carrying out pilot program under which foreign-invested institutions and large-scale banks may establish wealth management joint ventures in Shanghai; supporting foreign institutions in establishing or controlling securities operation institutions and fund management companies in Shanghai, lifting the limits for shares owned by foreign investors in personal insurance business from 51% to 100% in Shanghai; supporting overseas financial institutions in establishing or controlling pension management companies in Shanghai; the fund management center set up by a transnational company in Shanghai trading in the inter-bank foreign exchange market upon approval, financial leasing parent companies and subsidiaries registered in the Shanghai Pilot Free Trade Zone being allowed to share foreign debt quota; expanding the opening-up of the bond market, further facilitate the market access of overseas investors by record-filing; focusing on the development of RMB interest rate and foreign exchange derivative market, optimizing exchange rate risk management under financial investment of overseas institutions; allowing overseas institutions to sign the master derivative agreements with the National Association of Financial Market Institutional Investors (NAFMII), the Securities Association of China (SAC), or the International Swaps and Derivatives Association (ISDA) at their sole discretion; proactively supporting eligible science and technology innovation enterprises in seeking financing by listing on the stock market, studying on how to provide foreign investors with convenient exchange services for their direct participation in the issuance and trading on the Sci-tech Innovation Board.

4.《上海市全面深化国际一流营商环境建设实施方案》

Shanghai’s Implementation Plan for Deepening the Construction of World-class Business Environment

To deepen the implementation of Regulation on the Optimization of Business Environment, Shanghai’s Implementation Plan for Deepening the Construction of World-class Business Environment was jointly promulgated by Shanghai Municipal CPC Committee and Shanghai Municipal Government on February 19, 2020.

The Plan proposed thirty-six (36) specific measures covering four (4) aspects, namely, fully promoting the government affairs service brand of “All can be handled on one Network”, creating a business environment with more international competitiveness, strengthening the system supply on protecting and energizing market players,  implementing the organizational guarantee, in which the preferential policies in relation to foreign investment are as follows: further deepening the reform of fee reduction and speed upgrade of cross-border trade, promoting the reduction of port charges, regulating charging, strengthening the management of directory list for port charges, clarifying charging standard, implementing fee reduction measures, reducing the overall cost of custom clearance, realizing “one-stop” process and queries of port related charges; optimizing and improving foreign business environment, accelerating the construction of foreign service window "All can be handled on one Network", achieving bilingual services on enterprise-related policies and projects; setting up medical appointment column for expatriates, providing services such as medical guide and appointment in English, improving the English service marks of medical institutions; building special operation crew to improve the facilitation of expatriates’ working and living in Shanghai, providing precise resource connection for expatriates’ needs on facilitation of government and public services, setting up and improving the normalized service mechanisms .

5.《本市贯彻〈国务院关于进一步做好利用外资工作的意见〉若干措施》（沪府规〔2020〕5号）

Shanghai’s Several Measures on Implementation of Opinions of the State Council on Further Proper Utilization of Foreign Investment

To open up wider to the outside world, to continuously build new height to attract foreign investment, and to continuously create an international, rule-by-law, facilitated business environment, Shanghai’s Several Measures on implementation of Opinions of the State Council on Further Proper Utilization of Foreign Investment was promulgated by Shanghai Municipal Government on April 8, 2020.

Such Measures proposed twenty-four (24) specific actions covering four (4) aspects including: for opening up, supporting foreign investment to enter into new opened areas and increasing the openness in Shanghai Pilot Free Trade Zone and Lingang New Area; for strengthening the promotion of foreign investment, perfecting the "One-stop Service System for Foreign Investment Promotion", supporting to carry out internal and external investment promotion activities, improving the quality of capital  being absorbed by open platform, intensifying the support for major foreign investment projects, establishing incentive mechanism of investment services, strengthening talents introduction for key projects, exploring the establishment of market-oriented investment incentive mechanisms, supporting each district to organize groups to conduct investment introduction abroad, intensifying training for foreign investment promotion, strengthening the interpretation and publicity of foreign investment policy advocacy; in terms of raising the level of investment facilitation,  supporting the facilitation for cross-border capital investment, optimizing the process for the permits of foreigners’ entering into China and the approval for project planning; in terms of enhancing the protection for foreign investment, comprehensively implementing Foreign Investment Law, improving the mechanisms for government -enterprise communication services, perfecting the mechanisms for complaints of foreign investment enterprises and the lawful interest protection thereof, strengthening the normative of regulatory policy implementation, making judicial protection of intellectual property play important role, improving the mechanisms for intellectual property rights protection, increasing the transparency of foreign policies, supporting the participation in standards development, promoting the equitable participation in government procurement.

6.《上海市优化营商环境条例》（上海市人民代表大会常务委员会公告第35号）

Shanghai’s Regulation on the Optimization of Business Environment

To continuously optimize business environment, and to build Shanghai into an excellent global city, a socialist modern international metropolis with world influence, Shanghai’s Regulation on the Optimization of Business Environment was adopted by Shanghai Municipal People’s Congress on April 10, 2020, then published and implemented on the same day.

Those main contents and measures under such Regulation relating to foreign investment introduction include: benchmarking international high-level investment and trade rules to promote trade facilitation, and to encourage and promote foreign investment; implementing pilot foreign investment policies in China (Shanghai) Pilot Free Trade Zone and Lingang New Area to open wider to the outside world according to the national deployment; implementing management to those industries outside of national negative list for foreign investment access in the principle of consistency between domestic and foreign capital; encouraging various types of enterprises to set up headquarters, research and development center in Shanghai, encouraging those international organizations which are closely related to the construction of Shanghai international economic, financial, trade, shipping and innovation center to settle down in Shanghai, supporting to establish international organizations relating to those focused strategic emerging industries in Shanghai; promoting the construction of foreign service window on the platform "All can be handled on one Network" to provide facilitated government services for foreigners; providing English translation or summary for those local regulations, rules, normative documents closely relating to foreign investment.