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China
opens Shenzhen to foreign investment
Financial
Times Originally
published: June 16 2002
James Kynge |
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China has allowed its most successful special
economic zone, Shenzhen, to accelerate market access for
foreign investors, an unprecedented step that goes beyond
Beijing's commitments to the World
Trade Organisation.
The permission to Shenzhen to open up 20 local service
industries is remarkable partly because China spent much
of the 15 years it took to negotiate WTO accession fending
off demands for accelerated market access. The WTO agreement,
reached last December, opens most industries according
to a staggered five-year programme.
But now, officials and analysts said, competition among
Chinese cities to attract foreign investment has prompted
applications for special treatment. Shenzhen is the first
to have received Beijing's approval but other special
economic zones and cities are likely to press their case.
"Shenzhen has recently been given approval by the central
government to open up 20 key service sectors ahead of
the WTO timetable. We submitted our proposal [to open
up ahead of the timetable] to central government at the
end of last year," said Ye Minhui, director of the Shenzhen
Bureau of Foreign Trade and Economic Co-operation.
Mr Ye said the scheme, if successful, could set an example
for the rest of the country, adding that Shanghai had
already applied for similar treatment. Officials in Shanghai's
government declined to comment, but one in the northern
city of Tianjin said he thought accelerated market access
was a good idea.
But other observers warned that allowing several coastal
cities to go faster than the WTO commitment could create
loopholes in the agreement's enforcement, create jealousy
among competing regions and widen the wealth gap between
developed coastal regions and the relatively impoverished
interior.
The areas to be opened ahead of the WTO timetable in Shenzhen
include financial services, securities, ports, hospitals,
procurement centres, tourism and logistics. The details
are still being formulated but in several cases, foreign
companies would be allowed to assume full or majority
ownership of business operations one or two years earlier
than stipulated under the WTO agreement.
A range of tax incentives for the procurement centres
was being considered by the local government, including
tax rebates for the export of domestic products, officials
said. More than 20 multinationals, all of them Fortune
500 companies, have expressed interest, the officials
added.
Shenzhen, which borders Hong Kong, approved 1,860 foreign
investment projects last year with a total value of $4bn,
a 51.6 per cent increase over the same period in 2000.
It has been both the showcase and laboratory for China's
economic reform for much of the past 20 years and is rapidly
becoming a base for high-tech industries. |
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