Amid supportive national and local policies to align with high-standard international economic and trade rules and promote institutional opening-up, the China (Shanghai) Pilot Free Trade Zone has rolled out specific measures in sectors such as value-added telecom services, biopharmaceuticals and service trade in a bid to facilitate the high-quality development of foreign enterprises in key areas in the country.

The measures came following the State Council, China's Cabinet, approved a general plan for advancing the institutional opening-up of the China (Shanghai) Pilot Free Trade Zone in alignment with high-standard international economic and trade rules in December 2023.

The plan, which urged the Shanghai FTZ to expand the opening-up of the service trade, bestowed upon the FTZ a new strategic mission to pioneer the establishment of an institutional system and regulatory model that align with high-standard economic and trade rules, to create a national demonstration zone for institutional opening-up, and to explore new paths and accumulate new experiences for the comprehensive deepening of reforms and expanding opening-up.

Value-added telecom services

The relaxation of foreign capital access in value-added telecom services has been a crucial aspect of opening-up in the service industry since the establishment of the Shanghai FTZ. In 2013, the FTZ took the lead in launching a pilot program to open up value-added telecom services to foreign investment.

In April of this year, the Ministry of Industry and Information Technology of China released a circular on launching pilot projects to expand the opening-up of value-added telecom services, proposing pilot projects in a few designated pilot regions, including the Shanghai FTZ. Foreign ownership restrictions for value-added telecom services such as internet data centers (IDC), content delivery networks (CDN), internet service providers (ISP), and more have been lifted.

The new policy shift aligns with the broader strategy of integrating with international high-standard economic and trade rules, emphasizing high-quality digital trade regulations and facilitating data flow across borders.

As of the end of September, there were a total of 11,695 registered value-added telecom service operators based in Shanghai, with foreign-invested enterprises accounting for 3.75 percent of the total, amounting to 439 companies. Shanghai's Pudong New Area currently leads the city in the number of certified value-added telecom service providers, with 427 of them being foreign-invested enterprises.

Biopharmaceuticals

In the biopharmaceuticals sector, the Ministry of Commerce, the National Health Commission, and the National Medical Products Administration of China jointly made a new policy announcement regarding expanding openness in the medical field on Sept 8.

The new policy includes pilot projects in biotechnology and wholly foreign-owned hospitals and specifies that the China (Beijing) Pilot Free Trade Zone, China (Shanghai)Pilot Free Trade Zone, China (Guangdong) Pilot Free Trade Zone, and Hainan Free Trade Port are designated as pioneering pilot regions. It also includes human embryonic stem cells and gene diagnostic and treatment technologies within the scope of the pilot program.

The negative list for foreign investment access has been reduced, with manufacturing sector restrictions reaching zero. Foreign investment enterprises are granted national treatment in sectors beyond the negative list.

These moves signal a positive attitude towards gradually widening foreign access in the biopharmaceutical sector, presenting new opportunities for development and participation in the Chinese market to foreign enterprises.

Service Trade

As early as 2018, the Shanghai FTZ had already issued a negative list and implemented measures for cross-border service trade, taking the lead in institutional innovation in this field.

In September, the State Council issued guidelines on promoting high-standard opening-up to drive the high-quality development of service trade, emphasizing the establishment of a negative list system for cross-border service trade and enhancing the management of cross-border flows of capital, technology, human resources and data. The document aims to deepen regulatory alignment with international high-standard economic and trade rules.

The newly issued policy announcement provides solid policy support and institutional safeguards for the high-quality development of service trade. Initiatives like the negative list for cross-border service trade and the exploration of cross-border service trade in free trade zones are steps towards opening-up nationwide.