IS SHANGHAI A VIABLE CENTRE FOR FOREIGN BUSINESS ACTIVITY?

The place of Shanghai in the national economy is closely linked with foreign capital. During the 1930s, the city was a financial centre for the entire Far East, with the total capital of foreign banks accounting for nearly 60 per cent of Shanghai’s total. The strong local economy also promoted a high volume of exports.

In the early days of the reform, however, Shanghai seemed to have lost its past glory. While preferential policies granted to some previously backward areas like Shenzhen, Zhuhai, Shantou and Xiamen led to much greater power for the local governments in decision-making, Shanghai was still wearing its central planning straitjacket.

As China’s key industrial centre, Shanghai was seen as having the country’s most talented human resources in the fields of science and technology, economics and finance. Its location gave the city proximity to both northern and southern coasts as well as the Yangtze River Valley. Most importantly, many top Party and government leaders were promoted directly from Shanghai.

The decision to promote economic development in Shanghai came in 1990 when the State Council announced the development and opening up of Pudong to the outside world. This provided an opportunity for Shanghai to maintain its sustained and fast economic advance in the past few years. From 1992 to 1998, Shanghai had registered an annual GDP growth rate above 10 per cent for seven consecutive years.

This solution offers information on:

§ a detailed geographic, demographic, economic and governmental profile of Shanghai;

§ the legal framework for local law-making;

§ the legal framework for foreign business organisation and administration;

§ local tax incentives and measures for encouraging foreign investment;

§ regulation of contracts, labour management and land use rights; and

§ other activities or special areas.