The China (Shanghai) Pilot Free Trade Zone for the first time released a negative list for the services sector, a major institutional innovation to further liberalize market access for foreign participation in areas such as transportation, insurance and communication. The move means foreign service providers investing in areas not listed will now be treated the same as domestic companies, reducing red tape and other restrictions. Special regulations governing investment by foreign entities, such as requiring a Chinese joint venture partner, will continue to apply to sectors on the negative list. The reform by the Shanghai FTZ is the first such move in the country. The negative list covers a total of 159 special administrative measures involving 31 industries in 13 sectors, including cross-border financial services.

“Among the 159 special management measures, 31 belong to the financial sector, which include monetary and financial services, capital market services, insurance and other financial services,” said Li Jun, Deputy Director of the Shanghai Financial Service Office. Others involve postal and courier services, culture, sports and entertainment, scientific research and technological services, leasing and commercial services, telecommunications, software and information technology services, wholesale and distribution services, water conservancy, environment and public facilities management, education, agriculture, forestry, animal husbandry, fisheries and residential services, construction, health and social services.

“The replacement of the traditional ‘case-by-case approval’ model with the ‘pre-establishment of a national treatment + negative list’ approach is a meaningful institutional innovation which is based in Shanghai but will benefit the whole country,” said Wu Qing, Vice Mayor of Shanghai. China’s trade in services totaled USD695.7 billion last year, the largest after the United States. Shanghai’s trade in services totaled USD195.5 billion last year, making it the leader in the sector. Services accounted for nearly 30% of the city’s foreign trade – 14.6 percentage points higher than the national level, the Shanghai Daily reports.