Business Alert – China

Established in 1990, Shanghai’s Waigaoqiao Bonded Area was China’s first bonded area under special customs surveillance. Tax concession and trade facilitation were its winning edges. Today, the Waigaoqiao Bonded Area has teamed up with the Yangshan Deep Water Port and the Pudong Airport Comprehensive Bonded Area to form the Shanghai Comprehensive Bonded Area.

The Shanghai Comprehensive Bonded Area has so far approved 11,000 investment projects from 94 countries and regions, with total investment amounting to US$24 billion. Eleven Fortune 500 companies have invested in 263 projects in this bonded area. Import/export trade going through this bonded area is expected to reach US$100 billion in 2011, with total imports amounting to US$75 billion, up 21% year on year.

As one of the leading Customs surveillance areas in China, the Shanghai Comprehensive Bonded Area has the conditions to integrate with international practice and become a free trade zone.

The report on the establishment of China’s first free trade zone in Pudong has already been submitted to the authorities concerned. The municipal government of Shanghai is also actively making preparations for its establishment. However, since there are differences between bonded areas and free trade zones in terms of surveillance and the degree of openness, Shanghai must make some important policy adjustments and breakthroughs if it really intends to build a free trade zone, for example, in areas that concern the interests of the whole nation, such as the legal jurisdictions of Customs authorities and the free convertibility of the Chinese currency.