Chapter 1 General Provisions
Article 1 These regulations are formulated in accordance with the Foreign Investment Law of the People’s Republic of China, Regulations for the Implementation of the Foreign Investment Law of the People’s Republic of China and other relevant laws and administrative rules, with due consideration of the actual situation of Shanghai, to open wider to the outside world on a higher level, promote and stabilize the foreign investment and protect the legal rights and interests of foreign investors to establish a new pattern for the full opening-up.
Article 2 The regulations apply to the foreign investment within the administrative area of Shanghai as well as the promotion, protection, administration and service related to the foreign investment.
Article 3 The principles of marketization and the rule of law are adopted in Shanghai to create an international and convenient environment to fully implement the national treatment to foreign investors. The promotion and protection mechanism for foreign investment is established and improved to create a stable, transparent, predictable and fair market environment to improve the level of opening up.
Article 4 The management system of pre-establishment national treatment and negative list applies to the foreign investment in Shanghai. In the fields outside the negative list for the access of foreign investment, the local government and departments at all levels shall not make restrictions on the access of foreign investment.According to the laws promulgated by the state government, the foreign investors and their investments are granted the treatment no less favorable than that granted to domestic investors and their investments in the stages of establishment, operation and disposal.
Article 5 The municipal and district government shall strengthen the organization and leadership of foreign investment, promote the overall progress, formulate policies and measures to promote and facilitate the foreign investment, establish the discussion and coordination mechanism for foreign investment to coordinate and solve the major issues in foreign investment.
The municipal commission of commerce and development and reform commission shall, as per the division of duties, push forward, protect and manage foreign investment, while other relevant departments shall take charge of the promotion, protection and management of foreign investment within the scope of authority accordingly.
The foreign investment administration department of the district government (hereinafter referred to as district commission of commerce) and other departments under the district people’s government are responsible for the promotion, protection, management and service of foreign investment in this district within the scope of authority.
Article 6 The municipal and district commission of commerce shall organize and coordinate with foreign investors and foreign-funded companies to deal with problems in cross-department and cross-regional operation. Each department shall perform the duties respectively to solve the problems and report to the municipal and district commission of commerce while the municipal and district commission of commerce shall give the feedback to the foreign investors and foreign-funded companies as soon as possible.
Article 7 Employees of foreign-funded enterprises shall establish a trade union, carry out trade union activities and safeguard the legitimate rights and interests of employees according to the laws. Foreign-funded enterprises shall provide their trade unions with necessary conditions to carry out activities.
Chapter 2 Expanding the Opening-up
Article 8 According to the overall opening-up plan of the state government, Shanghai, as a gateway and hub of the opening-up policy, shall implement the generally accepted high standard for international investment and trade, promote opening up based on flows of goods and factors of production and extend to opening up based on institutions of rules, regulations, management systems and standards to deepen and broaden the fields with a high-level and all-round opening up.
Article 9 According to the national opening up plan of the service industry, the financial fields are firstly opened in Shanghai, which include the banking, securities, insurance, futures, trust investment, asset management, credit rating, and then the fields of telecommunication, Internet, medical service, transport, culture and education. Shanghai takes an initiative to implement the opening up policies and measures for other service industries.
Article 10 China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as FTZ) shall widen the opening up to the outside as one of the pilot free trade zones in China to reach the highest standard and level in the world. China (Shanghai) Free Trade Zone will implement the national experimental policy and measures for foreign investment, test the opening up pressures and accumulate the valuable experience that can be reproduced and used as reference.
The experimental policies and measures for foreign investment can be widely applied in a larger region beyond the free trade zone, unless such policies and measures only apply to the free trade zone.
Article 11 China (Shanghai) Pilot Free Trade Zone Lingang Section (hereinafter referred to as Lingang Section) shall focus on some key fields listed in the national strategy with greater demand in the world market that require higher level openness and explore the differentiation with more flexible foreign investment liberation and convenience policy to provide more convenience to foreign investment, accelerate the free flow of commodities, capitals, transport, talents and information. With more favorable tax system and policy, the free trade zone in Shanghai will become more competitive and influential in the world market.
Article 12 According to the national strategy for the integrated development of the Yangtze River Delta, supported by the collaboration mechanism in the Yangtze River Delta, concerted efforts are made to promote the opening up in some important fields to improve the overall level of the opening up to the outside. The integrated ecological development demonstration area in the Yangtze River Delta is considered as a key point and an important platform to explore and highlight the strength of the innovative development policy, increase the combined effect of the opening up and form the reasonable industrial layout of foreign investment. Promote the well improved and unified directory of investment projects approved by the government of the integrated ecological development demonstration area in the Yangtze River Delta while the investment projects beyond the directory shall be filed and reported. The standard procedure and process for the business registration of foreign-funded enterprises shall be released and widely accepted. The standard work permit application process of high level foreign talents and service system shall be established.
Further enhance the function of Hongqiao Central Business District in promoting the international trade, focus on the development of modern service industry and deepen the joint development with the Yangtze River Delta to make Hongqiao a hub opening to the world.
Article 13 The relevant departments of the municipal government shall take advantage of the good opportunities brought by China International Import Expo (CIIE) to maximize the influence of CIIE which is considered as an open platform for international procurement, investment promotion, cultural exchange and people-to-people communication by providing excellent service to the exhibitors, organizing activities to promote trade and investment and coordinating the CIIE and investment promotion.
Article 14 In case the expansion of open fields requires legislation guarantee, the local government needs to communicate with the relevant state government authority to update the applicable laws, administrative regulations, decrees of the state council and department rules.
The updated laws, administrative regulations and decrees of the state council related to foreign investment shall be implemented immediately unless the regulations shall be formulated or amended by the state government authority.
Chapter 3 Investment Promotion
Article 15 The municipal and district people’s government shall establish and improve the foreign investment promotion service system led by government with the participation of professional organizations, chambers of commerce, associations and enterprises to provide comprehensive investment promotion service to foreign investors and foreign-funded enterprises.
Article 16 An integrated foreign investment promotion service platform shall be established to collect and publish the laws, regulations, rules, normative documents, policies and industry news and project information related to foreign investment. The online and offline service system helps to provide the latest information, introduce the projects to suitable investors and coordinate the foreign investment.
The foreign investment promotion platform shall gradually provide the information and service in multiple languages.
Article 17 The municipal and district people’s government and relevant departments shall organize various investment promotion activities, including the introduction of the city or the region, project introduction on special topics or contract-signing ceremony.
The municipal foreign investment promotion organization shall introduce the investment environment in Shanghai, organize the investment promotion activities, provide consulting service to foreign investors and foreign-funded enterprises and provide assistance and guidance to the investment promotion organizations established in each district, pilot free trade zone, Lingang Section, national and municipal development zones, Hongqiao Central Business District in the foreign investment promotion activities.
Encourage all the investment promotion organization to organize investment promotion activities in Shanghai, promote the development of exhibitions and international events related to the culture, science and technology and sports through the investment promotion, expand the channels to attract more foreign investment and improve the quality of foreign investment.
The municipal commission of commerce shall make an overall plan and provide guidance and service in the foreign investment promotion activities in Shanghai together with the municipal foreign affairs departments.
Article 18 Shanghai will strengthen the communication and cooperation with friendship cities in the world, friendship organizations and cities in other countries and regions in investment, economy and trade.The municipal commission of commerce and foreign investment promotion organization shall enhance the relationship with foreign investment promotion organizations in Shanghai, establish the cooperation relationship in investment promotion, establish investment promotion organization in foreign countries if necessary to form and improve the overseas investment promotion network.
The investment promotion organizations established by Shanghai government in foreign countries shall maintain effective communication with the municipal and district authorities as well as the industrial parks to work together with the overseas offices to introduce and bring in more projects.
Article 19 The municipal commission of commerce shall prepare and update the foreign investment guidebook and foreign investment environment whitepaper with both English and Chinese versions from time to time together with the relevant government authority. The district commission of commerce shall prepare the foreign investment guidebook for the projects in the district accordingly.
The foreign investment guidebook shall include the introduction of economic and social development in this district, key areas, investment fields with advantages, introduction of investment environment, foreign investment guidance, investment promotion and relevant data.
Article 20 Encourage and lead foreign investors to make investment in the fields listed in the Recommended Foreign Investment Industry Directory and major development zones in this city.Foreign investors who have made investment in the projects listed in the Recommended Foreign Investment Industry Directory are entitled to the preferential tax policy and land use right. The investment projects shall be confirmed and approved by the online approval and supervision platform.
Foreign investors who have made investment in the projects in the major development zones may be exempted from the expenses or provided with land resources upon the approval of the municipal and district people’s governments within the scope of their respective authority.
Article 21 Shanghai will be built into a high end economic platform for headquarters, encouraging the foreign investors to establish the regional headquarters of transnational companies and all functional organizations in Shanghai, giving full support to them to upgrade to Asia Pacific Headquarter or global headquarter to centralize the business and other functions. The headquarter of transnational companies and functional organizations in Shanghai are entitled to the financial aid and great convenience in the entry and exit, talent introduction, fund settlement, trade and logistics, customs clearance etc.
The municipal commission of commerce shall make continuous innovation on policies and measures together with the relevant departments to introduce, recognize and provide service to the regional headquarter of transnational enterprises and functional organizations.
Foreign investors are encouraged to establish investment companies in Shanghai. The local government gives full support to the investment companies to carry out the investment activities and provides convenience to them in the equity exchange and cash inflow/outflow.
Article 22 Foreign investors are encouraged to establish foreign-funded research and development centers in Shanghai and upgrade them to global research and development centers. Foreign-funded research and development centers shall be recognized by the municipal commission of commerce. The municipal commission of commerce, technology department, development and reform department shall provide service and convenience to the recognized foreign-funded research and development centers in the participation in government scientific research projects, application of research results to production, patent application, import of commodities required for the research and development etc.
Foreign investors are encouraged to establish an open innovation platform in Shanghai to integrate the sophisticated technology, experts, funds, achievements and experiment facilities to accelerate the cooperation between small and medium-sized enterprises, innovation team and transnational companies to improve the innovation level.
Article 23 The financial institutions in Shanghai are encouraged to provide multiple financing channels to foreign-funded enterprises. These foreign-funded enterprises may apply for bank loans, issue the securities like stocks and bonds in domestic or overseas stock market, issue the other financial instruments in a public or non-public way or raise fund through external debts.The financial institutions in Shanghai shall provide convenience to the foreign-funded enterprises in the cross-border financing with local or foreign currency according to the state government’s regulations on the administration of cross-border financing.
Article 24 Foreign-funded enterprises are encouraged to make re-investment in domestic market according to the law.
Foreign investors expanding the investment in China with the investment income received from the Chinese market are entitled to the corporate profits and preferential tax policy. For example, no withholding tax shall be payable for such reinvestment.
Article 25 The district people’s government may make incentive measures to promote the foreign investment within the legal authority. The foreign-funded enterprises that are making great contribution to the regional economic and social development as well as the organizations and personnel that make outstanding contribution to the foreign investment promotion shall be rewarded.
Chapter 4 Investment Protection
Article 26 The municipal and district people’s government and the relevant government shall implement the policies and measures made by the government authority regarding the capital allocation, supply of land resources, tax exemption and reduction, qualification approval, formulation of standards, project application and reporting, professional titles accreditation and human resources to support the corporate development and all the foreign-funded enterprises shall be treated equally and fairly.
Foreign-funded enterprises have the equal rights to participate in the government procurement, bidding and tender, land transfer and equity exchange through the public platforms in Shanghai.
Article 27 The municipal government doesn’t expropriate foreign investment. Under some unusual circumstances, the municipal government may expropriate and requisition the investment of foreign investors for public interests in accordance with the laws. The expropriation and requisition shall be conducted with no discrimination and in accordance with legal procedures. The compensation shall be made based on the market value of the investment to be expropriated.
In response to some emergencies like natural disasters or public safety accidents, the municipal and district people’s government and the functional departments may expropriate the properties of the foreign-funded enterprises, or ask the foreign-funded enterprises that produce or supply the daily necessities and relief supplies to organize the production to assure the supply. The expropriated properties shall be returned when the emergency ends or is solved. In case the expropriated properties of the foreign-funded enterprises are damaged or lost after the expropriation, the local government shall make the compensation to the foreign-funded enterprises.
Article 28 Foreign investors’ capital contribution, profits, capital gains, assets disposal income, intellectual property license fees, damages or compensation legally obtained, liquidation proceeds etc. received in China may be freely remitted inward and outward in RMB or foreign exchange according to law. The salary and other legal income received by employees of the foreign-funded enterprises who come from foreign countries, Hong Kong, Macau and Taiwan may be remitted outward freely. No entities or individuals shall make restrictions on the currency, amount and frequency of the transmittance.
The financial institutions in Shanghai are encouraged to use financial technology applications to provide convenient and online foreign exchange settlement service, explore and implement convenient measures to help the employees from foreign countries, Hong Kong, Macau and Taiwan to purchase foreign exchange.
Article 29 The municipal government protects the intellectual property rights of foreign investors and foreign-funded enterprises, accelerates the establishment of the cross-regional and cross-departmental protection mechanism for intellectual property rights, improves the intellectual property protection system based on justice and law enforcement system. Any infringement of the intellectual property rights of foreign investors and foreign-funded enterprises shall be punished according to the laws.
The local courts shall expediate the processing and review of evidence preservation and behavior preservation application related to the intellectual property of foreign investors and foreign-funded enterprises, make a ruling and execute immediately. In case of any repetitive infringement, malicious infringement and other serious violation, the punishment measures shall be taken in the forms of punitive damages etc. Some guidance for the application of laws as well as some classical cases of intellectual property judicial protection (Chinese and English versions) shall be released from time to time.
Article 30 The relevant departments in Shanghai shall establish and improve internal management system, take effective measures to protect the trade secret of foreign investors and foreign-funded enterprises acquired when performing the duties. In case some information containing trade secret shall be shared with other departments according to the law, such information shall be kept confidential from disclosures.The local courts shall enhance the judicial protection of trade secrets and apply the rules of evidence to alleviate the burdens of obligee to safeguard the rights.
Article 31 The foreign investors and foreign-funded enterprises are encouraged to cooperate with market entities and scientific research organizations based on the principle of voluntariness and business rules, and such technical cooperation is protected by laws.
Article 32 The municipal government shall allow foreign-funded enterprises to participate in the government procurement.
The foreign-funded enterprises shall not be treated differently or be discriminated in the release of procurement information, evaluation of suppliers’ conditions and evaluation criteria etc. There shall be no restrictions on the ownership, organization and share structure, investor’s nationality and product or service brand; the products and service to be provided in China by foreign-funded enterprises and domestic companies shall not be treated differently.
Article 33 When formulating the local regulations, rules, normative documents related to foreign investment, the departments responsible for the preparation of drafts shall listen to the opinions and advices from the foreign-funded enterprises, chamber of commerce and associations etc.
When formulating the normative documents related to the foreign investment, the compliance audit shall be made as required. In case there is no legal basis or administrative regulations, the legal rights and interests of the foreign-funded enterprises shall not be harmed and the obligations of the foreign-funded enterprises shall not be increased.
There shall be a necessary period for the adaption and adjustment of the normative documents and policies closely related to the production and operation of foreign-funded enterprises before the implementation, unless there is a specific rule that such document takes effect immediately upon the release and any delay hinders the implementation.
The local rules, regulations and normative documents closely related to foreign investment promulgated by the local authority shall be interpreted in a way that is easy to understand or be provided with an English version or an extract. Translation or extracts in other languages shall be available upon request.
Article 34 The commitments made by the municipal and district government and relevant departments within the authority to foreign investors and foreign-funded enterprises and contracts signed between the local government and foreign investors and foreign-funded enterprises shall be performed strictly, which shall not be violated or cancelled for the reason of administrative division adjustment, change of government, organization or functions or substitute of person in charge.
The municipal and district government and relevant departments shall take the legal responsibility in case the commitments or contracts executed are beyond the authority and considered invalid or unenforceable.
Article 35 Foreign-funded enterprises in Shanghai have the equal rights to participate in the formulation and revision of the local standards. In cases where the local standards are closely related to the production and operation of foreign-funded enterprises, it is advised to listen to the opinions of foreign-funded enterprises and try to provide the English translation or extracts of the standards for comments. Foreign-funded enterprises may appoint and recommend representatives to join the technical committee of standardization administration in Shanghai. Representatives of the foreign-funded enterprises are encouraged to join the national technical committee of standardization administration. Market administration and relevant departments shall make the whole process of the formulation and revision of the local standard open to the public to provide convenience and guidance to foreign-funded enterprises participating in the preparation and translation of local standards as well as the cooperation in the international standards.
No standards or guidance for local standards shall be used to hinder the participation of foreign-funded enterprises in fair competition.
Article 36 Foreign-funded enterprises may engage in franchised business activities including water supply, gas supply, sewage disposal, waste disposal, construction and operation of urban transportation, roads, rail transit and other public transportation system.
The policy for franchised business activities in urban infrastructure shall be equally applied to foreign-funded enterprises.
Article 37 Foreign-funded enterprises or the investors may make a complaint to foreign investment administration departments or organizations appointed by the municipal commission of commerce and district government (hereinafter referred to complaint processing center) in case they think the administrative behaviors of the administration bureau and staff violate the legal rights and interests of foreign-funded enterprises or the investors. The complaint processing center shall divide the job responsibilities among the departments at all levels and deal with the complaints properly together with the relevant departments. The municipal commission of commerce shall organize joint meetings together with the relevant departments to deal with the complaints made by foreign-funded enterprises, coordinate and accelerate the processing of complaints received by municipal government from foreign-funded enterprises, guide and supervise the processing of complaints made by foreign-funded enterprises in each district. The municipal commission of commerce shall improve the complaint processing procedures, regulate the way of making complaints, specify the time limit to deal with complaints and make all the information available to the public.
Article 38 Based on the diversified dispute settlement platform, the mediation, commercial arbitration, administrative adjudication, administrative reconsideration and proceedings shall be established and improved to provide effective and convenient channels to foreign-funded enterprises to solve the disputes.
The duly established arbitration organizations in Shanghai are encouraged to explore system and mechanism innovation, improve the arbitration rules fit for the foreign investment with reference to the laws, regulations and international commercial arbitration customs, make the commercial arbitration system to reach the international standard, respect the decision and choices made by the concerned parties and allow the concerned parties to choose the appropriate arbitration procedures and applicable laws to provide independent, fair, professional and efficient arbitration services.
In case of any significant, complicated and difficult administrative reconsideration cases related to foreign investment, the administrative reconsideration committee shall appoint non-permanent committee members or experts familiar with international economic and trade investment rules to participate in the administrative reconsideration.
According to the overall strategy and planning of the state government, more efforts shall be made to establish the international commercial adjudication organizations, innovate the international commercial adjudication mechanism and accelerate the establishment of adjudication system that satisfies the needs to solve international commercial disputes in Shanghai.
Article 39 Foreign-funded enterprises may establish chamber of commerce and association and decide to join or quit the chamber of commerce, association, unless otherwise specified in the laws and regulations.
The chamber of commerce and association in Shanghai may report member’s requests and provide services to members including, information consulting, training, market expansion, trade communication, protection of rights and interests and dispute settlement etc.
Chapter 5 Investment Management and Service
Article 40 Foreign investors making investment in the areas where investment is prohibited under the special administrative measures for the access of foreign investment (negative list) shall meet the requirements for the equities and senior managers. Foreign investors shall not invest in the prohibited areas. Management of foreign investment in the areas beyond the negative list shall be consistent with the principles that apply to domestic companies.
When the market administration, development and reform departments and other industry authority in Shanghai deal with the application for business registration, project approval or filing or license, it is required to review the qualification of the applicant according to the negative list and provide consulting service to foreign investors and foreign-funded enterprises, share information with other departments and simplify the approval procedures of negative list for the applications approved by other departments.
Article 41 When application for the incorporation and change of business registration of foreign-funded enterprises, the applicant shall warrant that all the requirements in the negative list are satisfied and the articles of association, agreements, resolutions and qualification certificates submitted are true, accurate and valid. A written decision shall be made by the local market administration to the applications in due form and with complete information, unless specified otherwise in the laws and regulations.
Article 42 Foreign investors and foreign-funded enterprises in Shanghai shall apply for the approval or registration of foreign investment project to the local government authority like the development and reform commission for any construction or acquisition related to fixed asset investment through the online approval and supervision platform prior to the implementation of such projects in accordance with the regulations promulgated by the state and municipal government.
Except for the non-restricted investment projects in the negative list or the projects either with foreign investment or domestic investment requiring the approval or administration, the development and reform commission shall make the registration and administration for foreign investment projects in the same way that applies to the domestic investment projects. The projects are considered duly registered once the all project information submitted by foreign investors and foreign-funded enterprises are received online.The administrative measures on the approval and registration of foreign investment projects are promulgated by the municipal government.
Article 43 Foreign investors and foreign-funded enterprises shall submit the investment information to the commission of commerce through the business registration system and enterprise credit information publicity system while the municipal commission of commerce shall provide guidance to foreign investors and foreign-funded enterprises in the submission of investment information.
Foreign investment reports shall contain all the required information. It is not required to resend the information that is available by sharing with other departments. The municipal commission of commerce and market administration shall coordinate and communicate with concerned parties and departments.
Article 44 The municipal departments shall provide full cooperation to the state government authority to carry out the plans and tasks according to the censorship and requirements of the state government.
Article 45 The municipal development and reform commission, business department, economic information department shall establish a sound service system for significant foreign investment projects together with the relevant departments and district government. All the foreign investment projects included in the List of Significant Foreign Investment Projects shall be provided with one-stop service through the green channels in the project entry, planning, land use, environmental protection, power consumption, construction and foreign exchange etc. to support the implementation of the projects. In cases where any project is to be recognized as one of the major projects in Shanghai, the coordination mechanism for municipal major projects shall apply.
Article 46 The effective communication mechanism between government and enterprises is established for foreign-funded companies in Shanghai.
The municipal and district government and relevant departments shall organize round-table conferences from time to time or listen to the opinions of foreign-funded enterprises by site visit, questionnaire, online survey etc., helping the companies to solve the problems they have in the production and operation and improving the relevant policies and measures.
Foreign investors and foreign-funded enterprises may make requests and put forward suggestions via service hotline “12345”, business service App, foreign investment promotion service platform, chamber of commerce and associations etc. The relevant departments shall respond and solve the problems as soon as possible.
Article 47 The applications for work permit, entry & exit, stay & residence made by the foreign employees of foreign-funded enterprises shall be processed and completed within seven working days by the science and technology administration and exit and entry administration via the exclusive service counter for foreigner’s work and residence permit.
In case the foreign-funded enterprises apply for the work permit for foreign talents specialized in high tech, special skills and other talents approved to be urgently needed, the municipal science and technology administration may relax the restrictions on age, education level and work experience etc.Foreigners having business or commercial activities upon the invitation of foreign-funded enterprises are entitled to the port visa and visa-free stay granted by exit and entry administration and immigration inspection authority.
Article 48 The municipal commission of commerce shall have a special service counter to handle the foreign affairs with the support of online service platform, providing the assistance and guidance in English to foreigners and foreign-funded enterprises, including the English description for the scope of services and instructions on the procedures.Article 49 The municipal and district people’s congress standing committee shall strengthen the supervision on the foreign investment in this administrative region by listening to the work report or conducting law enforcement inspection.
The municipal and district people’s congress standing committee shall organize the special research, investigation and visit with the participation of all representatives, gather and report the opinions of foreign investors and foreign-funded enterprises to urge the relevant departments to push the foreign investment projects forward.
Chapter 6 Supplementary
Article 50 The regulations apply to the investors from Hong Kong Special Administration Region, Macau Special Administration Region, Taiwan and Chinese citizens permanently residing abroad, unless otherwise specified in the laws and administrative regulations or by state council.Article 51 The regulations shall take effect from November 1, 2020.