By Zhong Nan ( China Daily)
Officials say the establishment of the Shanghai Pilot Free Trade Zone will firmly upgrade thenation's shipping and port industries amid the slow global economic recovery.
Wang Xinkui, director of the counselor's office of Shanghai municipal government, said transittrade has great potential in raising China's shipping activities in the zone because it will not onlystimulate the export of manufacturing goods in China's Yangtze River Delta region but will alsooffer long-term growth opportunities to various ports in the country's Zhejiang and Jiangsuprovinces.
With a total area of 28.78 square kilometers, the zone manages four areas with the applicationof favorable customs supervision. It comprises Yangshan bonded port, Shanghai Waigaoqiaobonded zone, Waigaoqiao bonded logistics park and Shanghai Pudong Airport Free TradeZone.
Goods can be imported, processed and re-exported without the intervention of customs insidethe zone, which means it permits the free and fast flow of commodities.
"The FTZ is a proactive move to follow the new trend of global trade and economicdevelopment," Wang said. "For both Chinese and foreign companies, it is also an ideal way toship industrial intermediary products or materials from a foreign source for use in factories inother overseas markets via Shanghai."
The world's major free trade centers such as Dubai, New York, Hamburg and Amsterdam are alldefining themselves as international shipping hubs or global logistics centers because thispractice is an effective way to drive regional growth in the trade, finance and service sectors.
To shipping companies and ports, an abundant supply of goods is the foundation of openingnew shipping routes, building oil wharves and improving port facilities. Flexible financialreforms, including preferential tariff policies, lifting restrictions on interest rates and foreignexchange quotas could attract more container and bulk ships come to Shanghai.
As the world's largest container port by volume, the total trade value of Shanghai Port hit $434billion in 2012, exceeding most ports in the world, according to Shanghai International Port(Group).
He Liming, chairman of the Beijing-based China Federation of Logistics and Purchasing, saidanother breakthrough is that the zone has loosened foreign investment rules for setting upshipping companies in the Chinese market.
If foreign companies wanted to invest in the international shipping business in China, they hadto do it through a restricted joint venture. The proportion of their holding share was set at 49percent maximum. Foreign ships were also not allowed to carry out domestic shipping business,according to China's foreign investment regulation on international shipping business issued in2004.
"The new FTZ policies include relaxing limitations on foreign ownership in joint ventures,allowing Chinese companies to be partly or fully owned by foreign buyers, as well as usingships without Chinese flags to operate coastal trading and enabling the establishment offoreign ship management companies," He said.
"This transformation will be a push to improve China's service standards of related businessessuch as maritime arbitration, shipping insurance, trade services and financial operations."