“Shanghai Free Trade Zone Announces “Institutional Opening” Plan, but Foreign Companies Remain Skeptical”
After a recent visit by the leader of the Communist Party of China, Xi Jinping, to Shanghai, the State Council of the Communist Party of China has issued a plan for the so-called “institutional opening” of the Shanghai Free Trade Zone. The plan aims to align with international economic and trade rules and includes 80 measures across 7 aspects, with a focus on cross-border investment and financing.
However, analysts believe that while the CCP continues to tighten political control, these measures may be meaningless and are unlikely to convince foreign companies to invest in the region.
One of the most attention-grabbing measures involves the export of financial data abroad. In light of recent laws such as the “Data Security Law” and the “Counterespionage Law,” which have resulted in raids on foreign companies and the detention of employees, foreign companies remain skeptical about the potential benefits of investing in the Shanghai Free Trade Zone.
The Shanghai Free Trade Zone, which was established in 2013, was initially intended to be a pilot project for expanding opening up and promoting open economic systems and mechanisms. However, it has faced criticism and has been labeled an unfinished project by the outside world.
In response to the new regulations on the export of financial data abroad, Liang Shaohua, a former chief compliance officer of mainland asset management companies, expressed concern that the strict control of data within China, coupled with the potential implications of the Counterespionage Act, is deterring foreign companies from investing in the region.
The new measures from Shanghai come after Beijing’s “Expanded Opening Plan Version 2.0” for the service industry, which was approved in late November. Both plans are seen as attempts to stimulate the Chinese economy, which has seen a decline in foreign direct investment.
However, experts and analysts maintain that the measures are temporary and do not address the underlying concerns of foreign companies. Hu Liren, a former Shanghai entrepreneur, noted that the shift in the political climate has had a significant impact on the economy, with many companies struggling to stay afloat.
As China’s economy continues to face challenges, foreign countries are becoming increasingly skeptical of the CCP’s measures and are less likely to be deceived by promises of liberalization. As such, it remains to be seen whether the Shanghai Free Trade Zone’s “institutional opening” plan will be enough to attract foreign investment.