1. Setting the background

On November 26, 2023, The State Council issued the Overall Plan for Promoting the High-level Institutional Opening-up of the China (Shanghai) Pilot Free Trade Zone by Comprehensively Integrating High-standard International economic and trade rules (hereinafter referred to as the "Overall Plan"). In recent years, China's economy is at a critical phase of transformation and upgrading, and it needs deepening reform, expand opening-up and promote high-quality development. With the constant deepening of global economic integration, international economic and trade rules are also improving and developing. In this context, in order to meet domestic demand and keep up with the international pace, the Chinese government has formulated the Overall Plan, which will not only help promote the transformation and upgrading of China's economy, but also enhance China's status and influence on the international economic stage.

2. General Requirements

As an important window of China's reform and opening up, the China (Shanghai) Pilot Free Trade Zone has been actively exploring and practicing a higher level of opening up. The Overall Plan takes the China (Shanghai) Pilot Free Trade Zone as the object, comprehensively formulates the follow-up service ideas and service directions, focuses on accelerating the opening up of trade in services, improving the level of liberalization and facilitation of trade in goods, taking the lead in implementing high-standard digital trade rules, and strengthening intellectual property protection, and proposed 80 measures to promote high-level institutional opening up.

From the perspective of seven aspects: the Overall Plan puts forward clear guidelines from the beginning of trade to the end of trade, and then to the protection and compliance after the end of trade, including: accelerating the opening up of trade in services, upgrading the level of liberalization and facilitation of trade in goods, taking the lead in implementing high-standard digital trade rules, strengthening intellectual property protection, advancing reform in government procurement, promoting reform of relevant "behind the border" management system, and strengthening the development of a risk prevention and control system.

From the perspective of three financial measures: First, they will expand the application scenarios of digital financial services in international economic and trade exchanges. The main purpose is to strengthen application of cutting-edge technologies in such areas as electronic payment and cross-border asset management, and to explore the application scenarios of digital RMB in trade. Meanwhile, the measures will realize the value of financial data, carry out cross-border flow of financial data under the framework of national data transmission security management, and facilitate the grouped and synergistic operation of domestic and foreign-funded financial institutions in Shanghai. Secondly, business entities will improve the ability to coordinate the allocation of domestic and foreign funds, and further optimize the level of cross-border investment and financing services of the Shanghai headquarters economy by optimizing the policy of centralized operation and management of cross-border funds of multinational corporations and improving the functions of the free trade account system. The third purpose is to improve the international service level of Shanghai's financial market and products, build an international reinsurance board, and realize the transformation and upgrading of China's reinsurance market from "one-way opening" to "two-way opening". Increase the supply of cross-border financial products and services, enrich the varieties of cross-border assets transfer denominated in RMB, carry out international commercial factoring business, and better meet the diversified needs of different types of enterprises for financial services in the international market exhibition activities.

From the perspective of two free trade facilitation arrangements, adapting the two major measures to strike a combination of blows, from the application, inspection, protection of multiple angles to jointly promote free trade facilitation. First, we will strive to promote the construction of a trade facilitation system that is in line with international prevailing rules. Second, efforts have been made to create a market-oriented, law-based and world-class port business environment. For goods imported in the China (Shanghai) Pilot Free Trade Zone, foreign exporters or producers are allowed to apply for advance rulings to the customs through their agents in the zone, expanding the scope of subjects applying for pre-adjudication, and further enhancing the predictability of enterprises in import and export trade activities. In terms of intellectual property protection, the Customs will initiate border measures on imports and exports of suspected infringing counterfeit goods. For the suspected infringement and counterfeit goods found in transit, the Customs in China may inform the customs of the destination country of the goods of relevant information.

3. Follow-up planning

The development of the China (Shanghai) Pilot Free Trade Zone is full of innovation and exploration. Since its establishment in 2013, the China (Shanghai) Pilot Free Trade Zone has been conducting pilot trials in the fields of trade facilitation, investment standardization, government function transformation, financial innovation and reform, and strengthening supervision and management. In addition, the China (Shanghai) Pilot Free Trade Zone has also continuously promoted the transformation of government functions, through the implementation of the "An integrated online platform" government service platform, to achieve information sharing and collaborative work of multiple departments, greatly reducing the cost of business and individuals. Therefore, combined with the Overall Plan, it is not difficult to see that the subsequent legal and institutional updates will be carried out in the following three aspects with the China (Shanghai) Pilot Free Trade Zone as a precedent.

First, to further deepen reform and innovation, and introduce simplified policies to optimize the whole chain and process of customs clearance. The customs clearance facilitation measures proposed in the Overall Plan will help optimize the functional layout of international transit, build a whole-link and whole-process operation time monitoring system, strengthen cross-departmental coordination, and further reduce the overall customs clearance time at ports, and subsequent supporting policies and systems may be launched to speed up the whole process.

Second, to further build smart ports and emphasize the digital role of cross-border trade through laws. The Overall Plan clearly proposes to support the construction of a cross-border data exchange system for Shanghai's "single window" for international trade, which will help build a smart port big data base and a "one-stop" trade digital public service platform based on a variety of new technologies such as big data, artificial intelligence, and blockchain, relying on the "single window" for Shanghai's international trade. We will improve the digitalization and intelligence of cross-border trade. Subsequent relevant laws and regulations are also expected to emphasize digitalization, technology, artificial intelligence and other fields, and transform from traditional ports to digital smart ports.

Thirdly, to further optimize services for enterprises, and constantly improve the overall service environment of trade, as well as the internal environment of enterprises. There are more than 50,000 import and export enterprises in Shanghai, and the concentration of service trade enterprises is also very high. The measures proposed in the Overall Plan to promote cooperation and digital development of small and medium-sized enterprises will help strengthen the communication and service between government departments and trading enterprises, especially small and medium-sized enterprises, and further enhance the sense of gain and satisfaction of trading enterprises. Meanwhile, the Overall Plan also put forward guiding ideas for the reform of state-owned enterprises and the protection of workers' rights and interests. It will help enterprises to continuously protect the rights and interests of workers. Shanghai may also introduce local policies according to this idea, and relevant enterprise system makers can also refer to and learn from it in advance.

4. Summary and Prospect

The Overall Plan puts forward requirements for the trade business of the China (Shanghai) Pilot Free Trade Zone from multiple angles, which reflects the importance of the whole country to the China (Shanghai) Pilot Free Trade Zone, and it can also be seen that the subsequent policies are inclined to the freedom of trade, smart ports, and the combination of trade and science and technology, and the key development projects related to the trade industry that attract the world's attention are piloted in the China (Shanghai) Pilot Free Trade Zone. In the future, high-tech, free trade, customs simplification, etc., may be one of the directions of policy support.

The overall plan is a guide for China to further integrate with global standards in the future, and lead the development of the global trade industry, as well as an opportunity for China's free trade and high-tech trade. It is believed that more policies conducive to international trade can be introduced in the near future to help the vigorous development of various related industries.

Annotation

[1] Promoting the high-level Institutional Opening of China (Shanghai) Pilot Free Trade Zone, Guangming Daily, 2023.12.9.

[2] Docking International High-Standard Economic and Trade Rules - Shanghai Expands the Opening of Financial Services to the Outside World, Xinhua News Agency, 2023.12.8.

[3] State Council Policy Briefing on Promoting the Full Alignment of China (Shanghai) Pilot Free Trade Zone with International High-Standard Economic and Trade Rules, Shanghai Municipal Commission of Commerce, 2023.12.8.