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China To Establish Three More Free Trade Zones

by Mary Swire,, Hong Kong

17 December 2014

On December 12, a State Council executive meeting chaired by China's Premier Li Keqiang announced that three more free trade zones (FTZs), on the lines of that already established in Shanghai in September last year, will be established in the city of Tianjin and the provinces of Guangdong and Fujian.

Such a decision had been awaited for some time, as the Chinese Government had already stated its intention to use the example of the trade, financial and investment liberalization measures introduced in Shanghai, to spread reforms and re-incentivize economic growth throughout China.

The Shanghai FTZ has concentrated on financial services and investment, commodities trading, and logistics (particularly international ship management), while offering additional tax incentives for investment and trade, together with zero customs duties and import taxes.

The State Council has now also stated that investment liberalization will be further increased in an expanded Shanghai FTZ, by reducing the "negative list" of those sectors still not open for foreign investment.

It is expected that the new FTZs, while benefiting from a similar easing of financial and investment controls, and claiming the same tax incentives, will also specialize in other sectors, particularly given their local conditions and geographical location.

It is planned, for example, that the Guangdong FTZ, being close to Hong Kong, will concentrate on trade and financial reforms, while that in Fujian will do the same but concentrate on Taiwan, its close neighbor. Tianjin could have a specialization in the financial leasing sector.

TAGS: tax | investment | business | tax incentives | financial services | tariffs | China | tax breaks | import duty | trade | free trade zone | services | business investment

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