China unveils list of measures to facilitate pilot reforms in Shenzhen

The General Office of the Chinese Communist Party Central Committee and General Office of the State Council (General Offices) have issued a series of new favourable policies, aiming to promote continuance "comprehensive reform" in Shenzhen.

Shenzhen, China's first Special Economic Zone (SEZ), celebrated its 40th anniversary in mid-October this year. The General Offices have issued a series of new favourable policies, aiming to promote continuance "comprehensive reform" in Shenzhen and to build it into a "demonstration zone for socialism with Chinese characteristics".

This notion of "demonstration zone" was initiated in August 2019, when the General Offices published an opinion on Shenzhen's development plans¹. To facilitate the objectives set out one year ago, the General Offices issued the Implementation Plan to Facilitate the Pilot Reforms in Shenzhen in Building a Pioneering Demonstration Zone for Socialism with Chinese Characteristics (2020 to 2025) on 11 October 2020 (the Implementation Plan)² .

The Implementation Plan highlights the "comprehensive authorisation" as a crucial reform for Shenzhen, under which General Offices will grant greater autonomy to Shenzhen by issuing lists of approved matters (the Authorisation List) and confer relevant management authority on Shenzhen accordingly. This is a significant measure compared with the usual case-by-case approval process. The first of Authorisation List was released on 18 October 2020 (the First Authorisation List)³.

The First Authorisation List consists of pilot measures regarding market-oriented allocation of production factors, business environment, science and technology innovation, opening-up the market, public services, as well as environmental and urban space governance. It should be noted implementing most of the pilot measures would require the amendments of the existing laws and regulations. Key points of the First Authorisation List include:

• expanding the legislative powers of Shenzhen by giving it the right to set precedents in areas such as artificial intelligence, automated driving, big data, biomedicine, medical health, information services, personal bankruptcy and etc. Shenzhen will be given immense support to make full use of the legislative powers granted as a SEZ. The General Offices will be backing Shenzhen to take the lead in the field of drone management, and to formulate corresponding supporting systems;

• encouraging Shenzhen to take the lead in financial market reform, which includes promoting the reform of the ChiNext board and the implementation of the registration-based IPO scheme on ChiNext board; launching stock index futures of the Shenzhen Stock Exchange (SZSE) and diversifying the product portfolio continuously; and encouraging innovative enterprises (domestic or red-chip) to issue shares or Chinese depository receipt and to be listed on SZSE. More efforts will be put to advance the Renminbi internationalisation and improve the foreign exchange management system;

• opening up the telecom sector gradually by category, which includes opening up the fundamental telecom services orderly and securely; accelerating the opening-up of value-added telecom services and lifting the restriction on foreign share ratio; and granting Shenzhen SEZ the authority to approve foreign investments in telecom enterprises;

• establishing big data centres for the Guangdong-Hong Kong-Macao Greater Bay Area (the GBA); and assessing the establishment of a data transaction market or carrying out data transactions on existing trading platforms;

• carrying out pilot reforms for the protection of new types of Intellectual Property Rights (IPR), which includes implementing legal protection system for new types of IPR; improving the system for protecting the rights and interests and ensuring fair competitions in relation to digital IPR such as internet information; establishing a punitive compensation system; lowering the threshold for establishing criminal cases of trade secret infringement; introducing discovery, exclusionary and best evidence rules; and promoting adoption of blockchain technology in the course of judgments; 

• streamlining the immigration control for foreign talents and the practising requirements for foreign professionals; and

• establishing an international arbitration centre in GBA; and to support the establishment of a joint international investment arbitration centre led by the international arbitration institutions in Shenzhen; and to build up an exchange and cooperation mechanism for international arbitration bodies and arbitrators.

The First Authorisation List also includes special measures to relax restrictions on sectors of energy, public service, transport and education, based on the nationwide negative list. Some of the measures on the list are already under implementation, such as the registration-based IPO scheme on the ChiNext board, and an ordinance of personal bankruptcy that will take effect next March.

Foreign investors are recommended to pay close attention to the pilot measures to be passed by the legislative bodies of the Shenzhen SEZ and other follow-up policies to be implemented in the near future.

^{1《中共中央国务院关于支持深圳建设中国特色社会主义先行示范区的意见(2019年)》(“Opinions of the CPC Central Committee and the State Council on Supporting Shenzhen in Building a Pioneering Demonstration Zone for Socialism with Chinese Characteristics (2019)” )}

^{2 《深圳建设中国特色社会主义先行示范区综合改革试点实施方案（2020-2025年）》(“Implementation Plan to Facilitate the Pilot Reforms in Shenzhen in Building a Pioneering Demonstration Zone for Socialism with Chinese Characteristics (2020 – 2025)”)}

^{3《深圳建设中国特色社会主义先行示范区综合改革试点首批授权事项清单(2020年)》(“First List of authorised Measures to Facilitate the Pilot Reforms in Shenzhen in Building a Demonstration Zone for Socialism with Chinese characteristics (2020)”)
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