Companies in Shanghai Free Trade Zone (FTZ) now can borrow from international lenders with lower financing costs, supported by the regulations allowing more flexible currency flows.
More than 70, 000 Free Trade (FT) accounts, which function like “RMB offshore accounts”, have opened in Shanghai. Companies borrowed more than 1.3 trillion Chinese yuan ($0.19 trillion) through their FT accounts by the end of 2018.
Chen Kai, general manager of the Sinopharm Holding Finance Leasing, deals with a large amount of money every day. His company purchases expensive medical equipment from abroad at their clients’ requests and leases the machines to them, saving their clients the needs to buy equipment with lump-sum payments.
“Each of our order stands at around 50 to 60 million yuan. The highest can be about 300 million,” said Chen Kai.
In most cases, the leasing company doesn’t buy that equipment with their funds but relies on long-term bank loans.
For the last four years, the company has used its FT account in a bank to convert currencies freely.
“We’ve started using the FT account since 2015. We find it helpful since it provides more competitive rates and longer loan duration,” he said.
Supportive Shanghai FTZ policies attract overseas talent
Not only is cash flowing more quickly in Shanghai FTZ, but also skilled talent. Measures have also been taken to ease labor mobility crossing the border so that the companies can attract human capital from abroad.
Hong Chow is a Chinese-German and the country manager of a world-leading biotech company. She was the first to get the “Chinese green card” as one of the free trade zone foreign talent.
Chow, general manager of Roche China, said, “With this card, I think for instance my child can get a local education, I can buy a property. If you read the back of my card, it actually says it provides the same benefits as a local resident.”
Chow is the beneficiary of China’s first talent scheme to allow free trade zones to permit foreign talent for permanent residency. Shanghai has a relaxed work permit and green card policies in recent years.
Cai Baodi, director of Exit-Entry Administration of Shanghai Public Security Bureau, said, “We want top talent, which the city urgently needs. Now the criteria for the green cards’ application are based more on market and industry standards.”
Deeper reform and further opening-up
New measures have been taken in Shanghai to deepen reform and further opening-up, making it more appealing for overseas companies to do business in Shanghai.
Ying Yong, Shanghai mayor, said, “59 thousand companies have registered in the Shanghai Free Trade Zone since its establishment in 2013, more than the number in the previous two decades put together. Shanghai FTZ created one quarter of Shanghai’s GDP and tax income, with only a fiftieth of the city’s land area.”
The mechanisms and policies being piloted here are increasing, with other free trade zones around the country adopting them as their own. It’s a trend that planners expect will contribute to the high-quality development of the nation.