As part of its plans to open up the country's economy to more foreign investments, Shanghai formally launched a new expansion to its Pilot Free Trade Zone.
The new Lin-gang Special Area was officially launched on Tuesday with a launching ceremony that was attended by both government officials and business executives.
China's Cabinet originally revealed the framework plan for the Lin-gang Special Area earlier in the month. It was meant to be integrated into the 6-year-old Shanghai Free Trade Zone and to become a new symbol for China's economic opening-up to foreign investments.
The Lin-gang Special Area is the second official expansion of the Shanghai Free Trade Zone.
During the launching ceremony, China's Minister of Commerce Zhong Shan stated that the new Lin-gan Special Area should help advance the country's strategy to further develop the Yangtze River Delta Region. Zhong explained that the new area should serve as a perfect example of China's resolve to build itself up into an open economy.
During the launching ceremony, Shanghai officials had announced the proper guidelines to follow for various processes of applications. These included guidelines for overseas investments, transportation, employment, capital flows, and information exchanges.
The new 119.5-square kilometer area is expected to grow into its own special economic zone by 2035. Companies that specialize in areas such as semiconductor manufacturing, biotechnology, and artificial intelligence will be given a preferential 15 percent business income tax for the first five years.
The special rate should result in millions of dollars in savings for interested companies given that the standard business income rate in the country is 25 percent.
One of the first foreign companies that will be establishing its manufacturing facility in the Ling-gang Special Area is US electric firm, Tesla.
The company's planned factory, estimated to cost around $7 billion, is set to be located in Lin-gang. According to Tesla's global vice president, Tao Lin, the company had obtained its first comprehensive qualifications certificate this week.
The Shanghai FTZ expansion is one of three major strategic decisions that were outlined by Chinese President Xi Jinping during his keynote speech at the first China International Import Expo in November of last year. Apart from the expansion of the Shanghai FTZ, Xi also outlined guidelines for the integrated development of the Yangtze River Delta Region.
The last of the decisions for Shanghai was the implementation of the NASDAQ-style technology innovation board, also known as the Star Market. As of today, Shanghai has managed to implement all three development decisions outlined by the president.
