MOVING to ease legal barriers for foreign investment, China’s top legislature yesterday gave its approval to the State Council to suspend three laws pertaining to the planned free trade zone in Shanghai.
The National People’s Congress Standing Committee has authorized the Cabinet to suspend administrative approvals for foreign-funded enterprises, Chinese-foreign equity joint ventures and Chinese-foreign contractual joint ventures in the planned free trade zone, the Xinhua news agency reported.
China has been trying to speed up the transformation of government functions and to innovate the mode of opening up.
The suspension will last for three years starting from October 1. The laws will be amended and improved if the suspension of administrative approvals during the trial period prove successful, Xinhua reported.
If they do not help, the laws will be back in force.
“The suspension of the laws reflected the authorities’ determination to deepen reforms by decentralizing executive power and would provide an impetus for Shanghai’s development,” said Chen Li, a strategic analyst with the UBS Investment Research.
The State Council said earlier this week that a negative-list management method and a registration mechanism will be introduced in the pilot free trade zone to replace the current approval system in order to cut bureaucracy for foreign investors.
The State Council has also proposed to suspend the law on the protection of cultural relics in the zone to allow foreign participation in the antique auction business, but the Xinhua report made no mention of any decision on the proposal.
China last week officially gave the nod to Shanghai to run a trial free trade zone, the first of its kind in the country.
Encompassing an area of 28.78 square kilometers, the pilot zone will cover Waigaoqiao Free Trade Zone, Waigaoqiao Bonded Logistic Zone, Yangshan Free Trade Port Area and Pudong Airport Comprehensive Free Trade Zone.
Shares of Shanghai Waigaoqiao Free Trade Zone Development Co, operator of two of the four bonded zones, surged by the daily limit of 10 percent yesterday after it announced a refinancing plan.
Waigaoqiao plans to raise up to 2.7 billion yuan (US$443 million) at 13.2 yuan per share through a private offering, the company said in a filing to the Shanghai Stock Exchange yesterday. Shares of Waigaoqiao closed at 14.85 yuan yesterday.
The company said it will use 2.1 billion yuan of the proceeds to build five projects, including a regional headquarters center for multinational companies, a distribution center for Asia-Pacific region and platforms for logistics, trading and modern services.
The company will use the remaining 600 million yuan to replenish cash flow.
Waigaoqiao said it is the only listed company among the operators in the zones and it will undertake the financing task for the development of the zone. The company said its net profit soared 400.8 percent year on year to 526 million yuan in the first half of this year. Revenue rose 37.2 percent to 3.98 billion yuan.