Shanghai proposes a free trade zone

Shanghai Customs officials say that the local government has now formally submitted to the State Council plans for a proposed free trade zone in Shanghai. One analyst says the city needs to improve its communication systems to fully take advantage of this zone.

The planned free trade zone will take up 28 square kilometers at the Waigaoqiao port in Pudong. Detailed regulations have not yet been announced, but trade and manufacturing within the zone should be free of tariff charges. The move is expected to expand Shanghai's foreign trade volume in the Waigaoqiao port, currently running as much as a trillion US dollars a year. One analyst says the benefits will be well above even that, however.

Prof. Qiang Yongchang of Fudan University, said, "With the opening of the free trade zone, more consumers will come to Shanghai for shopping. In turn, the city's tourism will also get a boost. More corporations will be willing to invest in Shanghai, which will help the city's target of becoming an international trade center."

Shanghai's foreign trade volume hit 8 trillion US dollars last year, more than 20 percent of China's total. Qiang says, however, that a large volume of trade is not enough to make Shanghai a successful free trade zone.

Prof. Qiang said, "What we really need to do is to build an information sharing platform. For example, we could set up indexes for different kinds of commodities to let companies watch moves on the international market. That will make them more interested in setting up their headquarters in Shanghai, as they do in Hong Kong now."

So far, Shanghai has two customs bond areas -- one in Waigaoqiao port and the second at Yangshangang port -- for overseas traders to store or process their products. Goods imported to those two areas are not charged customs duties until leaving the ports.