With systematic innovations, goal is to become a 'benchmark of China's higher level opening-up'

Systematic innovation has been a major highlight in the three-year history of Lin-gang Special Area, helping it to grow into a new economic driver for Shanghai and advance the country's high-quality development, said officials and experts.

As the Lin-gang administrative committee has calculated, at least 87 systematic innovations have been developed in Lin-gang since its official launch on Aug 20, 2019, as part of the China (Shanghai) Pilot Free Trade Zone. Up to 36 such undertakings were made for the first time on a national level.

Danish shipping firm A.P. Moller-Maersk has recently experienced such systematic breakthroughs. At the end of May, when business was recovering from COVID-related disruptions in Shanghai, Maersk conducted its first series of coastal relays involving international cargo from Yangshan Port in Lin-gang to Tianjin. Maersk thus became the first foreign company to conduct international relay shipments in China.

International cargo relay shipments between two Chinese ports have historically been considered cabotage and therefore strictly prohibited for foreign carriers. In November 2021, the Ministry of Transport announced that such business would be allowed by foreign companies on a trial basis until the end of 2024.

During the trial operations, international carriers will transfer part of their transshipment business from Busan, South Korea or Singapore to Shanghai, said Cao Ming, head of Yangshan Customs. More importantly, Shanghai's role as an international shipping center will be further consolidated, Cao said.

Europe's major asset management company Amundi has also benefited from the systematic innovations in Lin-gang. In late 2019, the French company was approved to set up the first foreign-controlled wealth management joint venture in China by teaming up with Bank of China Wealth Management. With operations registered in Lin-gang, the JV saw its assets under management exceed 50 billion yuan ($7.3 billion) in one year's time. More than 130 products have been released so far.

Opening-up in key areas has been one major task for Lin-gang over the past three years in order to better facilitate investment, said Zhao Yihuai, deputy director of Lin-gang Special Area Administration.

Efforts have been made to create an investment environment with a level playing field in Lin-gang, so that foreign companies can set up wholly owned entities or companies with controlling stakes in the area. More participation of foreign capital has also significantly elevated business activity in Lin-gang, Zhao said.

His words are proven by the 64,000 companies newly registered in Lin-gang ever since its official launch. In other words, an average of more than 90 new companies have been registered every day.

Taking a closer look, over 200 shipping companies have set up operations over the past three years, of which 12 are among the world's 50 largest logistics companies. Up to 400 financial service providers have also set up branches in Lin-gang.

According to the mission that the central government assigned to Lin-gang in 2019, the area should seek systematic innovations by realizing higher levels of investment freedom, advancing free trade, facilitating capital flow, promoting transportation efficiency, creating a more amiable employment environment and providing smoother data flow.

With concerted efforts from the local and central government as well as favorable tax and legal policies, an opening-up mechanism featuring systematic innovations has been shaped in Lin-gang, Zhao added.

"More first attempts will be anticipated in Lin-gang to nurture systematic innovations, which will take the lead nationwide and integrate development across different sectors. In this way, Lin-gang can better address the country's major development strategies," he said.

Shanghai Mayor Gong Zheng said during a news conference in early August that an updated framework plan for Lin-gang's development is in the pipeline to nurture more systematic innovations.

As understood by Chen Jinshan, secretary of the Party working committee of Lin-gang Special Area, systematic innovation and opening-up have been the biggest strengths of Lin-gang, which has proved crucial to the area's development over the past three years. The systematic breakthroughs realized in Lin-gang are also of great importance to Shanghai, as the city is exploring new development models.

Zhao Xiaolei, director of the FTZ Research Institute at Shanghai University of Finance and Economics, said the core function of Lin-gang is to gather resources from around the world so that the area can grow into an internationally influential and competitive special economic zone. Higher targets should be set for Lin-gang, and it should set up a system that adheres to even higher standards regarding international trade and economic activity.

"The ultimate goal is to build Lin-gang into a benchmark of China's higher level opening-up," he said.