What Happened: Shanghai's mayor has provided further hints that his city aims to establish a zero-tariff policy at its expanded Lingang free trade zone after saying it would build a bonded facility and provide further tax incentives, the South China Morning Post reported Oct. 21.
Why It Matters: Chinese officials have been intensifying their efforts to attract foreign investment amid the ongoing trade war with the United States and growing skepticism over China's business environment. The size and scope of the planned bonded facility remain undisclosed, but authorities hope that the measures will transform the Lingang free trade zone into a free market area comparable to Hong Kong and Singapore. However, the Shanghai free trade zone has been facing lengthy delays due to bureaucratic constraints and slow reform processes.
Background: The Shanghai free trade zone opened in 2013 as a pilot project to experiment with currency internationalization, as well as trade and finance liberalization, among other plans.
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