FAQ | China (Shanghai) Pilot Free Trade Zone | China (Shanghai) Pilot Free Trade Zone


1. What does it mean that the FTZ allows foreign companies and Chinese private investors to enter banking business?
A: Banks in the FTZ can do foreign currency businesses with no restrictions. JV banks and banks with limited licenses are allowed to operate in the FTZ.

2. Can a private enterprise open a bank in the FTZ?
A: According to the Master Plan for China (Shanghai) Pilot Free Trade Zone and policies of the China Banking Regulatory Commission, private investors are allowed to open banks in the FTZ and take risks themselves or open a joint venture bank with a foreign financial institution.

3. Can private banks in the FTZ do all the businesses of a commercial bank?
A: The FTZ now allows investors to operate banks with a limited business license, which means private banks cannot accept money deposits. Therefore, private banks in the FTZ cannot do all the businesses of a commercial bank.

4. What is the meaning of offshore business in the FTZ?
A: Offshore business means that enterprises use overseas resources to manufacture products or provide services for overseas customers. It gives the enterprises four big advantages, namely tax reduction, good trade connections with other countries, freedom from foreign exchange control, and high level of business privacy. Offshore finance is the main part of offshore business. It absorbs funds from overseas clients and provides loans, documentary bills and other services to overseas clients such as cross-border payment settlement, foreign currency trading, and business consulting.

5. Do foreign investors have any limits in setting up a professional health insurance company in the FTZ?
A: A Sino-foreign joint venture or a cooperative enterprise must have a capital of no less than 20 million yuan. The Chinese partner must have a 30 percent holding in the company at least. Their term of investment or cooperation is limited to 20 years.

6. What are new policies for insurance companies in the FTZ?
A: There is a major innovation in professional health insurance services. The FTZ allows foreign companies to set up health insurance institutions. The China Insurance Regulatory Commission also announced to carry out trials for shipping insurance and liability insurance, which involve property insurance. Meanwhile, the CIRC supports insurance companies in the FTZ to conduct cross-border RMB reinsurance business and overseas investment.

7. How will the tax rebate policy apply to financial leasing companies operating in the FTZ?
A: Financial leasing companies registered in the FTZ or having a subsidiary in the FTZ, both foreign-owned and Chinese-owned, can enjoy the tax rebate policy. A foreign-owned financial leasing company should be licensed by the Ministry of Commerce. A domestic company should be licensed both by the Ministry of Commerce and the State Administration of Taxation to enjoy the policy. A subsidiary, also called special-purpose vehicle (SPV), refers to the legal entity set up for the specific purpose of isolating risks and obtaining overseas funds.

8. What policies has the Shanghai FTZ adopted to open the shipping industry to foreign companies?
A: The FTZ has relaxed the restriction on the percentage of foreign capital in a joint venture shipping company. Relevant regulations will be made by transport authorities with the State Council. The FTZ allows domestic enterprises to own or hold shares of foreign-registered vessels. Initially, they are allowed to do container shipping for import and export businesses between Chinese coastal ports. The FTZ allows foreign investors to establish solely-owned ship management enterprises.

9. What are the measures the FTZ has taken to open video games and amusement equipment industries to foreign investment?
A: The FTZ allows foreign companies to produce and sell video games and amusement facilities to the domestic market if their products pass content examination by cultural officials.

10. What are the requirements and procedures for an accounting firm to set up a branch in the FTZ?
A: The accounting firm should be a partnership or a limited liability partnership for at least one year. It has completed internal restructuring and is operating smoothly. It can set up a branch in the FTZ and must use Shanghai Free Trade Zone in the name of its branch. The application to set up a branch in the FTZ should be submitted to the Shanghai Finance Bureau for approval.

11. What has the Shanghai FTZ done to open the financial lease market to foreign investors?
A: The FTZ did not set minimum capital, but foreign companies must have a minimum capital of 50 million yuan to engage in financial lease services whether as a sideline or main business.

12. What is the definition of financial lease as promoted in the FTZ?
A: All types of financial lease companies are welcome to open branches in the FTZ and offer their services to customers in China and abroad.

13. What is definition of shipping finance as promoted in the FTZ?
A: Shipping finance covers all financial activities that occur in the operation of a shipping company, such as loans, insurances, currency custody, currency exchanges, and account settlement. It can be divided into shipping finance, shipping insurance, fund settlement and pricing derivatives.

14. What did the Shanghai FTZ do to open value-added telecom services to foreign investors?
A: The FTZ allows foreign companies to provide value-added telecom services (those not governed by existing laws or regulations must be approved by the State Council). Foreign investors of joint-venture enterprises are allowed to hold majority share.

15. What measures has the Shanghai FTZ adopted to open the performance market to foreign agencies?
A: Foreign investors are allowed to set up wholly-owned performance agencies in the FTZ.

16. What are the measures the Shanghai FTZ took to cut restrictions on foreign-invested recreational venues?
A: The FTZ allows foreign investors to open and operate wholly-owned entertainment venues.

17. Has the Shanghai FTZ lowered the threshold for joint-venture travel agencies to do outbound business?
A: The FTZ abolished the requirement that a joint-venture travel agency must operate at least two years in the FTZ before it can organize outbound tours.

18. What has the Shanghai FTZ done to open the employment service sector to foreign investment?
A: Overseas companies (excluding those in Hong Kong and Macau) can set up recruitment joint ventures with a holding of less than 70 percent; Hong Kong and Macau companies can set up wholly-owned employment agencies; the minimum capital required to open a foreign-invested agency has been cut to US$125,000.

19. How did the Shanghai FTZ reduce the threshold for foreign engineering companies?
A: Foreign engineering companies (excluding prospecting companies) are not required to show professional qualification and business record when setting up an operation in the FTZ. (They can only participate in Shanghai projects).

20. What measures has the Shanghai FTZ adopted to open up the construction market?
A: Foreign construction companies registered in the FTZ can bid for Sino-foreign cooperative projects in Shanghai without investment ratio restrictions.