China (Shanghai) Pilot Free Trade Zone (FTZ) is speeding up its exploration of offshore tax arrangements and freeport areas while improving its financial function to play a bigger role in the Belt and Road Initiative.

Shanghai FTZ will further introduce offshore tax arrangements, turn two of its existing bonded warehouse areas into freeports by 2020, and will enhance its financing service to help Chinese companies enter other overseas markets, according to the latest reform plan released by the State Council in March.

“As Chinese companies have been carrying out ‘going global’ strategy in wider areas, we have seen the demand for offshore tax arrangement in the Shanghai FTZ,” Zhu Min, deputy director of Shanghai Municipal Development and Reform Commission, said at a recent news conference.

As stressed in the reform plan, Shanghai FTZ will consider a favorable tax policy for the revenue gained overseas under the guideline of international and domestic tax regulations.

Zhao Xiaolei, director of the school of economics of Shanghai University of Finance and Economics, said offshore tax arrangement is necessary for trade and industry upgrading and optimization, and the related researchers and government are wasting no time to work out the details of such arrangement.

“From the research point of view, Shanghai will implement a 15 percent tax rate for offshore arrangement policy,” Zhao said. “Even comparing to the world, it is a quite low tax rate.”

The reform plan also aims to turn two bonded areas — the Yangshan Free Trade Port Area and the Pudong Airport Comprehensive Free Trade Zone — into transparent, efficient and convenient free trade ports of highest standards in the world, comparable to Singapore, Dubai, and major ports in the United States.

Zhu said the future freeports will not simply be an improved version of bonded ports. The aim will shift from facilitating trade and investment to further perfect it.

Shanghai FTZ is also improving its financial function to back the Belt and Road Initiatives. “Shanghai FTZ has been focusing on the strengthening of its financial service function for the Belt and Road Initiative, for example, cross-border renminbi settlement service,” Zhao said.

Zhao added the future financial service Shanghai FTZ provides will be a strong complement to the existing Asia Infrastructure Investment Bank and Silk Road Fund in supporting the Chinese companies to go global.

In 2016, companies registered in Shanghai FTZ invested 108 projects in 25 economies involved in the initiative, among which Chinese investment totals $2.63 billion, while 763 companies from 50 economies involved in the Belt and Road Initiative were set up in the FTZ, attracting $3.76 billion foreign investment.

Echoing the national call for Made in China 2025, Shanghai FTZ will also lower the bar for foreign companies to enter sectors such as transportation and medical equipment manufacturing, according to Zhao.