Shanghai's Lingang Special Area celebrated its third anniversary on August 20 and has turned into a hotbed of innovation and a new economic driver for Shanghai. At least 87 systematic innovations have been developed in Lingang since its launch, as part of the China (Shanghai) Pilot Free Trade Zone.
Danish shipping firm A.P. Moller-Maersk has recently experienced such systematic breakthroughs. At the end of May, when business was recovering from Covid-related disruptions in Shanghai, Maersk conducted its first coastal relays involving international cargo from Yangshan Port in Lingang to Tianjin. Maersk thus became the first foreign company to conduct international relay shipments in China. International cargo shipments between two Chinese ports or cabotage had been strictly prohibited for foreign carriers.
Europe’s major asset management company Amundi set up the first foreign-controlled wealth management joint venture in China by teaming up with Bank of China Wealth Management. With operations registered in Lingang, the JV saw its assets under management exceed CNY50 billion in one year. More than 130 products have been released so far. Opening-up in key areas has been one major task for Lingang over the past three years in order to better facilitate investment, said Zhao Yihuai, Deputy Director of the Lingang Special Area Administration.
Efforts have been made to create an investment environment with a level playing field in Lingang, so that foreign companies can set up wholly-owned entities or companies with controlling stakes in the area. More participation of foreign capital has also significantly elevated business activity in Lingang, Zhao said. Since its launch, 64,000 companies were newly registered in Lingang, an average of more than 90 new companies per day. Over 200 shipping companies have set up operations over the past three years, of which 12 are among the world’s 50 largest logistics companies. Up to 400 financial service providers have also set up branches in Lingang. According to the mission that the central government assigned to Lingang in 2019, the area should seek systematic innovations by realizing higher levels of investment freedom, advancing free trade, facilitating capital flow, promoting transportation efficiency, creating a more amiable employment environment and providing smoother data flow.
Shanghai Mayor Gong Zheng said in early August that an updated plan for Lingang’s development is in the pipeline to nurture more systematic innovations. Zhao Xiaolei, Director of the FTZ Research Institute at the Shanghai University of Finance and Economics, said the core function of Lingang is to gather resources from around the world so that the area can grow into an internationally influential and competitive special economic zone.
The amount of foreign capital injected into the Lingang Special Area in the first six months surged 263.3% year-on-year to nearly USD1.2 billion, exceeding the target of USD900 million for 2022. When production and daily life gradually returned to normal in late May, a total of nine foreign enterprises inked agreements with the Lingang Administrative Committee to set up more operations. The research and demonstration center of German vehicle design firm Isdera is one of the new projects. Stefan Peters, General Manager of Isdera (Shanghai) Automotive Technology, the local unit of the German company, said the Lingang base is scheduled to go operational in the first half of 2023. Thanks to Lingang’s geographical advantages, Isdera will build a sports car supply chain to meet demand from clients in Europe, the Middle East and Asia, he said. “The solid industrial foundation and the complete automotive industrial chain in Lingang are of much appeal to international carmakers of our kind,” Peters said.
Singapore’s United Overseas Bank announced it would set up a branch in Lingang in early May. Scheduled to go operational in early September, UOB’s Lingang branch will become the first foreign bank to have a physical presence in the area. Peter Foo, President and CEO of UOB China, said the opening-up policies in Lingang adopted over the past few years have largely facilitated international trade, investment and capital flow. UOB’s Lingang operations aim to provide more innovative solutions regarding cross-border capital management, offshore trade, overseas fund investment and sustainable finance, Foo added.
By the end of July, Lingang was home to 2,604 foreign companies, which is more than double the number three years ago when Lingang was included in the Shanghai FTZ. “Further opening-up is the biggest mission assigned to Lingang,” said Chen Jinshan, Director of the Lingang Special Area Administration. The Administrative Committee will seek more breakthroughs in areas of foreign capital, cross-border capital flow, talent flow and special tax mechanisms, the China Daily reports.
By 2025, Lingang should be home to over 1,000 high-tech companies, of which at least 10 should be listed on the technology-heavy STAR Market in Shanghai. More than 100 research and development institutions should have set up shop there by 2025, with another eight first-rate international laboratories operating in the area. The IC industrial value in Lingang should exceed CNY100 billion by 2025, compared to CNY10 billion in 2021. The area should be home to five world-leading chipmakers and another five leading material companies with an annual income of CNY2 billion. Corporate income tax rates for companies specializing in IC, artificial intelligence, biomedicine and civil aviation have been set at 15% in Lingang, compared to the usual 25% in the rest of China.
