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On 11 October 2020, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the “Comprehensive Reform Pilot Implementation Plan for Shenzhen’s Construction of a Pilot Demonstration Zone of Socialism with Chinese Characteristics (2020-2025)” (Pilot Plan). The Pilot Plan affirms the achievement of Shenzhen as a special economic zone in the nation’s reform and opening up efforts of the past 40 years. It also puts forward a series of pilot reform measures in seven aspects with the goals of improving the market-oriented system and mechanism for resource allocation, creating a market-oriented law based international business environment, improving the environment for technological innovation, furthering the high-level opening of the economic system, improving the system of the supply of service for people’s livelihood, improving the ecological environment and urban space governance system and strengthening safeguard measures. Among them, the major economic-related measures include the following:
| 1. | Facilitating pioneering efforts in the opening of the financial sector
| (a) | A fintech innovation platform will be established in Shenzhen. Internal closed pilot tests of digital renminbi (RMB) will be conducted, and the research, development, application and international cooperation with respect to digital RMB will be encouraged. | (b) | Financial industry will be further opened to the outside world. Eligible Shenzhen enterprises will be encouraged to apply for overseas listings to raise capital. The pilot projects will be launched related to in cross-border cash pool for both domestic and foreign currencies. Shenzhen will take the lead in promoting the internationalisation of the RMB. | (c) | Qualified foreign financial institutions will be supported in establishing securities companies and fund management companies in Shenzhen in accordance with the law. Eligible foreign institutions will be supported in obtaining payment service business licenses in Shenzhen in compliance with laws and regulations. | ||||||
| (a) | A fintech innovation platform will be established in Shenzhen. Internal closed pilot tests of digital renminbi (RMB) will be conducted, and the research, development, application and international cooperation with respect to digital RMB will be encouraged. | ||||||||||||
| (b) | Financial industry will be further opened to the outside world. Eligible Shenzhen enterprises will be encouraged to apply for overseas listings to raise capital. The pilot projects will be launched related to in cross-border cash pool for both domestic and foreign currencies. Shenzhen will take the lead in promoting the internationalisation of the RMB. | ||||||||||||
| (c) | Qualified foreign financial institutions will be supported in establishing securities companies and fund management companies in Shenzhen in accordance with the law. Eligible foreign institutions will be supported in obtaining payment service business licenses in Shenzhen in compliance with laws and regulations. | ||||||||||||
| 2. |
Supporting innovation in capital market development In addition to the foregoing measures, the Pilot Plan proposes the reform of the Growth Enterprise Market with pilot projects in the Growth Enterprise Market registration system, as well as supporting the domestic issuance of stocks or depository receipts (CDR) by innovative companies. A mechanism for transferring the listing for companies on the NEEQ (National Equities Exchange and Quotations) to the main board will be established. The market access environment for private equity funds and venture capital enterprises will be improved. Pilot projects for real estate investment trust funds in the infrastructure sector will be launched. | ||||||||||||
| 3. | Further opening up of the Shenzhen market
| (a) | Further to the national unified negative list for market access, a list of special measures for Shenzhen will be formulated to relax market access in the sectors of energy, telecommunications, public utilities, transportation, education and others. Restrictions on foreign investment in leading edge technology fields will be further relaxed. | (b) | The shipping industry will be further opened. The international ship registration system will be studied for improvement. Authorisation of bonded bunkering permission in Shenzhen for international ships will be granted and the bonded fuel oil supply market will be further opened. | (c) | Guidance on the resolution of major and complex foreign-related commercial disputes will be provided. Support for cross-border cooperation mechanisms in the field of the rule of law and international legal services and dispute resolution mechanisms will be improved. | ||||||
| (a) | Further to the national unified negative list for market access, a list of special measures for Shenzhen will be formulated to relax market access in the sectors of energy, telecommunications, public utilities, transportation, education and others. Restrictions on foreign investment in leading edge technology fields will be further relaxed. | ||||||||||||
| (b) | The shipping industry will be further opened. The international ship registration system will be studied for improvement. Authorisation of bonded bunkering permission in Shenzhen for international ships will be granted and the bonded fuel oil supply market will be further opened. | ||||||||||||
| (c) | Guidance on the resolution of major and complex foreign-related commercial disputes will be provided. Support for cross-border cooperation mechanisms in the field of the rule of law and international legal services and dispute resolution mechanisms will be improved. | ||||||||||||
| 4. | Expediting the further development of technology
| (a) | The digital market will be further developed. Mechanisms relevant to the protection, utilisation, sharing and trading of data property rights will be established and improved. | (b) | The city will become a benchmark city for protecting intellectual property rights. Pilot projects for the legal protection of new types of intellectual property rights will be launched. Systems for protection of digital intellectual property rights such as with respect to Internet information will be improved. Evidentiary rules and compensation measures under intellectual property laws will be reviewed and improved. Credit-based classified regulation in the intellectual property field will be implemented. | (c) | Improvement of relevant systems for the transformation of technological achievements will be expedited. Resource allocation methods and management systems will be optimised and innovated. An internationally competitive talent recruitment system will be established. Shenzhen will be encouraged to attract high-quality overseas educational resources and to establish high standard Sino-foreign cooperative educational institutions. | ||||||
| (a) | The digital market will be further developed. Mechanisms relevant to the protection, utilisation, sharing and trading of data property rights will be established and improved. | ||||||||||||
| (b) | The city will become a benchmark city for protecting intellectual property rights. Pilot projects for the legal protection of new types of intellectual property rights will be launched. Systems for protection of digital intellectual property rights such as with respect to Internet information will be improved. Evidentiary rules and compensation measures under intellectual property laws will be reviewed and improved. Credit-based classified regulation in the intellectual property field will be implemented. | ||||||||||||
| (c) | Improvement of relevant systems for the transformation of technological achievements will be expedited. Resource allocation methods and management systems will be optimised and innovated. An internationally competitive talent recruitment system will be established. Shenzhen will be encouraged to attract high-quality overseas educational resources and to establish high standard Sino-foreign cooperative educational institutions. | ||||||||||||
| 5. | Deepening the reform of land management system
The Shenzhen Municipal Government shall be entrusted with the approval on the conversion of agricultural land (except for permanent basic farmland) to construction land, which was previously handled by the State Council. Flexible use of the existing land resources will be explored and the supervision mechanism will be improved. |
The Pilot Plan covers various aspects of social life. From an economic perspective, its main goal is to build Shenzhen into a fintech centre. It is expected that special supporting polices will be issued for Shenzhen particularly with respect to capital financing, digital RMB and the internationalisation of the RMB. The Pilot Plan stresses the opening of Shenzhen’s financial market to foreign investment. Due to the special geographical position of Shenzhen, which is adjacent to Hong Kong and Macao, and with CEPA and the development of the Greater Bay Area in the background, the coming market opening policies for foreign investment in Shenzhen may make it a leading destination for investment in China. The Pilot Plan is a five-year plan, which aims to launch a series of important reform measures in 2020, make progress in 2022, and achieve landmark results in 2025. It is expected that corresponding implementation rules and regulations will be issued before the end of this year and follow-up measures will be released in the coming five years. International and domestic investors alike should benefit from these developments.
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