Chapter Seven  Pudong’s Economic and Social Development after China’s Accession to the WTO

 

    In 2003, the Pudong New Area has enjoyed a fairly sound economic and social progress with continuing fast growth in chief indicators such as economic aggregate, foreign investment and foreign trade. With regard to the implementation of China’s Accession commitment, the New Area Government has taken a considerable number of reformative measures to streamline administrative examination and approval process, expand market access, protect intellectual property rights, encourage the application for patent rights, and to facilitate trade.

 

I.                   Reform of Government Administration

    In 2003, the government of the Pudong New Area made great efforts to promote reform of the administrative examination and approval system so as to comply with the WTO principles of transparency and national treatment. Therefore, progress has been made in a number of areas including the improvement of government services, the removal and containment of administrative examination and approval rights, the standardization of regulatory measures, and integrated management functions.

 

1.      Promoting E-administration

A unified E-administrative information network has taken shape with the integration of system resources available. The network has enabled such online administrative functions as case acceptance, transfer, examination and approval, information downloading and enquiries. In particular, the “One-stop” online examination and approval system promoted by the government has greatly improved work efficiency.

 

2.      Simplifying Enterprise Access System

1) Further improving the notification and commitment system regarding enterprise access   

In 2003, the Pudong New Area continued to implement the examination and approval system based on notification and commitment, expanding the system coverage to 24 items. At the same time, operational methods regarding the notification and commitment system have been further improved, focusing on the scope of application and regulatory measures that come after notification and commitment.

 

2) Adopting direct registration for administrative examination and approval on a trial basis regarding the application by foreign-invested enterprises for a change in status.

   As a matter of fact, in the previous round of reform, the New Area Government had already adopted on a trial basis direct registration regarding the establishment of foreign-invested enterprises. In 2003, the scope of application has been further expanded to cover changes in enterprises listed as being encouraged or allowed with the exclusion of merger, severance, reduction of capital. A new principle has been formed accordingly. By the principle, all cases shall be submitted to the industrial and commercial administrative authority, which then transfers them to the Economic and Trade Bureau for examination and endorsement. After being endorsed, the cases will then be transferred back to the industrial and commercial authority for registration. Lead-time is limited to seven to ten working days.

 

3) Relaxing the control on the qualification of natural person as investment subject on a trial basis

  In compliance with the requirement of the Municipal Government, the Pudong New Area took the lead in conducting trial practices on relaxing the control on the qualification of natural person as investment subject. Restrictions have been lifted on natural persons who enjoy full civil action abilities for the establishment of various kinds of enterprises (including the enterprises established by single natural person, between natural persons, and between natural person and legal person). Besides, examinations have been called off on the documents that evidence the natural person’s occupational status. Instead, the notification and commitment system has been introduced for the registration of such enterprises. This reformative measure, which took effect as of July 10, 2003, is aimed at attracting private investment, promoting the development of non-public-ownership economy, and increasing job opportunities.

 

3.      Standardizing Regulatory Measures

A new regulatory system has been adopted, combining integrated regulation with separate annual inspection. Efforts have been made to comb through the items for annual inspection so that the items without solid legal basis were crossed out for annual inspection. For the remaining items, formalities have been simplified, forms unified and an annual inspection period adopted, thus making the system more convenient.

 

Continuous efforts have been made to push forward the establishment of an enterprise management and service information platform (hereinafter referred to as ‘platform’. On the platform, one can find the results of the annual inspection over taxation registration items in addition to the results of the annual inspection over ten items identified in the second-round of reform of the examination and approval system. Besides, day-to-day regulatory information of some authorities involved in the annual inspection has also been entered onto the platform, further improving the integrated regulatory information system. Based on this, separate regulatory systems have been adopted for different enterprises. That is, law-abiding and creditworthy enterprises are exempt from the annual inspection. They don’t have to hand in auditing reports. All they have to do is submit relevant information such as the annual inspection statement. A commitment filing system has been adopted for ordinary enterprises without law-breaking record, which will pass the inspection by committing themselves to the authenticity and effectiveness of the documents they present for annual inspection. A joint annual inspection system has been adopted for key industries, special industries, and industries that have much bearing on the health and safety of the people involved. At the same time, initiatives have been taken to popularize “online inspection”, which has greatly facilitated the business activities of enterprises.

 

II.                Market Access

1.      Trade in Goods

In 2003, the Pudong New Area enjoyed a record-breaking trade growth in goods, an increase of 57.6% over the same period last year. The total trade volume, amounting to USD58.132 billion, accounts for 50% of the city’s total. Exports stood at USD21.191 billion, up by 55.8% with imports at USD36.941 billion, up by 58.6%.

 

In the breakdown of trade in goods, general trade, reaching USD10.28 billion, accounts for 48.5%, up 63.3% over the same period last year; export processing, reaching USD9.612 billion, accounts for 45.4%, down 2.5%. Major trading partners of goods are the US, EU, Japan and Chinese Hong Kong, with which trade accounts for 70% of the total.

 

As China lowered the import duties for some of the goods in 2003 according to the commitment, imports in the Pudong New Area have increased very fast, with annual total reaching USD36.942 billion, up 58.6%. General trade amounted to USD15.66 billion, up 58.3%; processing and assembly with provided materials reached USD2.133 billion, up 65.4%; processing with imported materials reached USD4.598 billion, up 29%; entrepot trade at the Waigaoqiao Free Trade Zone reached USD12.283 billion, twice as much as that of last year.

 

Trading rights have been further liberalized in 2003 with the result that the number of newly approved domestic foreign trade enterprises hit a record high of 2,300, about 70% being private enterprises.

 

2.      Trade in Services

1)      Finance

The first Sino-foreign fund management company was established in 2003. Approved by the China Securities Regulatory Commission, BMO in Canada bought 20 million shares from Fullgoal Fund Management Company Limited, becoming one of the six shareholders of the company, each with an equal percentage of 16.67%. This is the first case in Mainland China where Sino-foreign financial joint venture was formed through the foreign partner’s buying of shares from a fund management company. On September 24, 2003, Fullgoal Fund Management Company Limited, one of the earliest ten fund management companies in China, registered with the relevant authority for the change in assets and became the only one of its kind with foreign investment.

 

After the joint venture was established, BMO sent a director joining the Board of Fullgoal as well as the special committees in charge of internal control and human resources management so as to enhance supervision over the management on the one hand and bring in sophisticated international management models and concepts on the other hand. Besides, BMO has also assisted Fullgoal in improving the existing monitoring and checking system and programs regarding the management of share distribution to individuals and investment portfolios. At the same time, the Canadian Bank has shared with its partner experience in making contingency plans over business existence and emergencies.

 

2)      Education

There were 30-odd Sino-foreign educational exchanges in Pudong in 2003, involving the hiring of 28 foreign teachers and the recruitment of over 400 foreign students.

 

3)      Health-care

There are two Sino-foreign cooperative hospitals and three short-term foreign doctors in Pudong. October 28, 2003 saw the official launch of Dongfang Sino-German Heart Center under Dongfang Hospital in Pudong. By December 31, about 300 new patients have been admitted to the Heart Center.

 

III.             Protection of Intellectual Property Rights (IPR)

1.      Improving Coordination between Government Agencies

In 2002, the IPR Joint Meeting was reorganized in Pudong so as to bring about close coordination between government agencies over IPR-related affairs and sound regulation, utilization and protection of IPR. The Meeting is made up of 15 members, namely, the Science and Technology Bureau (IPR Bureau), the Judicial Bureau, the Political and Legal Committee, the Legal Affairs Office, the Industrial and Commercial Administrative Bureau (Pudong branch), the Social Development Bureau, the Economy and Trade Bureau, the Cultural, Film, TV and Broadcasting Services Bureau, the Customs, the Court, the Procuratorate, the Quality and Technical Surveillance Bureau, the Pharmaceuticals Inspection and Surveillance Bureau, the Agricultural Development Bureau, and the Public Security Bureau. The Office for the Joint Meeting was set up at the IPR Bureau. The function of the Joint Meeting has been reinforced in 2003, providing a very good coordinative mechanism over the popularization, regulation, and law-enforcement of IPR.

 

2.      Conducting Education and Training on Intellectual Property Rights

The IPR Bureau has conducted education and training on IPR for three different groups including government officials, ordinary employees and the general public.

 

First, two seminars, captioned as “WTO and IPR” and “Patent Law and Patent Protection Regulations”, were held. Over 1,000 officials and leaders from enterprises and social units attended the seminars. Three special training reports were given to leaders at the New Area Party College with the attendance of over 200 people.

 

In the second half of March 2003, the IPR Bureau sponsored the Pudong New Area Seminar on Biomedicine-related IPR. Ten specialists and lawyers delivered speeches on the application for examination and protection of patent in the biomedicine area. The two-day seminar was fairly rewarding as it got active responses from the enterprises in the area.

 

On the World Intellectual Property Rights Day (April 26) in 2003, the IPR Bureau in Pudong launched an educational campaign at the grass-root level, explaining to Chuansha and Zhangjiang county officials and leaders of township enterprises detailed knowledge regarding IPR-related information and circulating IPR literature among local residents. This has greatly enhanced the public awareness in IPR protection.

 

3.      Strengthening Regulation over Technology-related Patent Rights

In order to comply with the Shanghai Patent Protection Regulation, the Science and Technology Bureau in Pudong amended the regulation governing the administration of science and technological development fund projects. According to the amendment, technological research and development projects launched under the fund should go through a patent retrieval process. Final acceptance of these projects will be based on intellectual property rights they have produced, which is also a prerequisite for getting the certification from the New Area’s enterprise technology development agency. The same principle is applied when it comes to the certification of hi-tech enterprises and the applicability of technology in projects by the Science and Technology Bureau.

 

4.      Promoting the Establishment of a Patent System in Enterprises

The IPR Bureau worked out a patent (IPR) program for seven pilot enterprises including the Shanghai High-Tech Bioengineering Co. Ltd. An agreement was also signed between the two sides on the experiment. According to the agreement, enterprises involved shall have a leader, a special unit, staff, and a system devoted to patents. Besides, specific requirements are laid down for patent application and use, patent documents retrieval and use, and patent protection. At the same time, the IPR Bureau provided guidance and services for these enterprises, putting policies in place, offering patent-related books, and arranging for the personnel in city-level patent model units and IPR lawyers in foreign-invested enterprises in the New Area to pass on their instruction as well as experience.

 

For personnel in charge of patent work in those enterprises, the IPR Bureau launched three training courses in the last two years. More than 100 people joined the training and were delivered the Shanghai Certificate of Patent Worker.

 

5.      Setting up IPR Public Information and Service Platform

In 2003, the Pudong IPR center pressed ahead with the establishment of a patent retrieval database. Thanks to the support given by the Science and Technology Bureau, the Center has successfully developed the patent retrieval software, based on which a patent information database was formed, enabling distant retrieval of Chinese patent documents and latest bulletins on patent via the Pudong Science and Technology Network and E-administrative Network of the Science and Technology Bureau. To further develop the functions of the database, a platform which features hi-tech industries in Pudong has been developed, providing retrieval and analysis of information regarding patent databases on biomedicine industries.

 

6.      Reinforcing the Efforts and Expanding the Scope of Administrative Enforcement of IPR Laws and Regulations

In compliance with the Shanghai Patent Protection Regulation, the IPR Bureau of the Pudong New Area has been coordinating actively with the Shanghai IPR Bureau in dealing with patent infringement cases involving people in Pudong New Area or patent dispute cases arising from important fairs and exhibitions that took place in the New Area. Starting from 2003, a sweeping law-enforcement campaign was conducted in the distribution area, cracking down on fake products or fake patented products. On Consumer Rights Protection Day (March 15) of 2003, the New Area IPR Bureau conducted an inspection of the patented goods at the Lotus Supermarket Shangnan Chain and Xinling Computer City. They informed the distributors timely of some fake products and fake patented products found during their inspection. Besides, the IPR Bureau has also selected some enterprises as pilots on patent protection so as to enhance IPR protection awareness among commercial enterprises, reinforce the administration over patented goods in the distribution area, and prevent infringement and law-breaking activities.

 

To implement Copyright Law, the Pudong Cultural Market Administrative Authority, entrusted by the China National Copyright Association on Musical Compositions, has started to charge copyright fees for the use of music in singing and dancing houses. Together with the efforts made to conduct the annual inspection of Cultural Business Licenses, the authority collected RMB330,000 from entertainment houses for the use of music copyright in 2002 with a total coverage of over 90%. The Cultural Inspection Brigade of the New Area has also intensified the enforcement efforts to regulate the market. The Brigade make sure that 60% of their working time is spent on outside inspection every week with no fewer than 60% of their force joining the inspection. From 2002 to July 2003, they conducted 349 inspections over places selling publications, involving 2,810 person-time, resulting in the filing of 78 cases, a total fine of over RMB510,000, the confiscation of 651,830 pieces of pirated audio-visual products and electronic publications and 28,945 pirated books, and the banning of 181 shops without business licenses.

 

Thanks to the above efforts, there has been a further increase in the quality and number of patent applications in the Pudong New Area in 2003. Total patent applications reached 2,580, representing a 7.6% increase over the same period last year, thus securing the second rank for the New Area in Shanghai. Among the applications, 1034 are about inventions, a 1.3-fold increase. The number of such applications accounts for 20% of the city’s total.

 

IV.            Trade facilitation

    The Pudong New Area is the major ‘battlefield’ for exercising the ‘Speedy Customs Clearance’ strategy as there are many foreign trade activities and a number of ports as well. Starting from October 1, 2003, the Shanghai Customs adopted the 5+2 days working system at the Customs of the Pudong International Airport, Customs Clearance Administration and the Customs of the Huangpu River, ensuring a year-round flow of people and goods at ports of Shanghai. This has effectively eased the ‘Friday Senario’ when there used to be quite a congestion regarding the flow of information, people, and goods, therefore reducing the business costs for enterprises.

  

    In response to the call made by the General Customs Administration of China, the Customs of the New Area has launched a joint network on processing trade. By December 31, the Customs have successfully conducted online regulation of seven enterprises that have joined the system, including the Shanghai Ricoh Fax Machine Company Limited and Kodak Electronics (Shanghai Branch). The enterprises have benefited greatly from the system as it takes them an average of 10 minutes (fastest 5 minutes) to go through import formalities and an average of 30 minutes (fastest 8 minutes) to go through export formalities.

 

    The Customs of the New Area also sped up the online regulation of the export processing zone. By the end of 2003, several enterprises had been brought into the system on a trial basis. The customs are going to popularize such system according to the results of the trial operation so as to meet the requirements raised by the State General Customs Administration for online, standardized and regionalized management.

 

    In particular, the Pudong New Area Customs also coordinated with the Customs at the airport on working out a procedure for speedy clearance required by IT industries in the area. On September 10, 2003, the direct passage system regarding air transport was adopted for the Jinqiao Export Processing Zone (South). The system has greatly sped up delivery and Customs clearance, ensuring fast development of business within the Zone.

 

    In August 2003, the Pudong Customs and Airport Customs started to offer fast clearance services to visitors who arrive with their exhibits. A special window is open for visitors with their exhibits so that they can go through the Customs ahead of ordinary passengers. The fast clearance system has greatly streamlined the Customs formalities for those participants of fairs and exhibitions, reflecting the technical support given by the Customs for the development of international fairs and exhibitions industry in Shanghai.