Shanghai Free Trade Zone: Practical Constraints Yet Policy Values

The China (Shanghai) Pilot Free Trade Zone (the "SFTZ") was officially launched on 29 September 2013. Although the press has applauded many policy breakthroughs in respect of the SFTZ, the SFTZ may not be appealing to many international businesses initially due to some practical constraints. But the SFTZ will function as a policy reform test field, and could have significant impact if it proves to be successful and the policies are replicated outside the SFTZ.

The SFTZ was officially launched on 29 September 2013. The press has applauded many policy breakthroughs in respect of the SFTZ, including the abolishment of the foreign investment approval system. Foreign companies can now set up subsidiaries or joint ventures in the SFTZ without having to apply for prior approvals from the Chinese government, as long as the business does not fall under the negative list published for the SFTZ.