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China Announces Further FTZ Plans

by Mary Swire,, Hong Kong

22 April 2015

Prior to the inauguration of Guangdong's new free trade zone (FTZ) on April 21, China's State Council released a foreign investment negative list for all of the new pilot zones in Tianjin city and Guangdong and Fujian provinces, together with further reforms already established in Shanghai.

The new negative list precludes foreign investment in projects in 49 industries. Those industries include agricultural seeding, fishing, oil and gas, aviation manufacturing, and nuclear power. Foreign investments in the FTZs outside those business areas should enjoy the same treatment as domestic investment.

The State Council added that clauses that favor investors in the FTZs, in the Closer Economic Partnership Arrangements that China has signed with Hong Kong and Macau, the Economic Cooperation Framework Agreement with Taiwan, and the free trade agreements China has completed with other countries, should be implemented accordingly.

The new FTZs will benefit from the same eased financial and investment controls and tax incentives. They will focus on specialized sectors, based primarily on their geographical locations, and offer additional tax incentives for investment and trade together with zero customs duties and import taxes.

Guangdong FTZ's importance for Hong Kong given its geographical proximity was emphasized by the attendance at its plaque-unveiling ceremony in Nansha of Hong Kong's Chief Executive C Y Leung, Secretary for Commerce and Economic Development Gregory So, and Secretary for Development Paul Chan.

A Hong Kong Government spokesperson commented on the FTZ's significance in facilitating trade and investment and fostering the Mainland's deeper economic co-operation with Hong Kong and Macau. It is hoped that it will develop "into an exemplary zone for in-depth co-operation amongst Guangdong, Hong Kong and Macau."

The spokesperson concluded that, given the Guangdong FTZ is intended to concentrate on the trade and financial services sectors, it will "greatly facilitate foreign enterprises, including Hong Kong enterprises, in investing in the FTZ."

TAGS: tax | investment | business | tax incentives | financial services | trade treaty | China | Macau | Taiwan | agreements | Hong Kong | import duty | trade | free trade zone | services

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