Introduction of China (Tianjin) Pilot Free Trade Zone 2015.6 Introduction of China (Tianjin) Pilot Free Trade Zone

CONTENT China Pilot Free Trade Zone Overview Investment Opportunities in TJFTZ China (Tianjin) Pilot Free Trade Zone Introduction

ESTABLISHMENTS OF CHINA PILOT FREE TRADE ZONE 2014 2013 FTZ 1.0 FTZ 2.0 Sep. 2013, China (Shanghai) Pilot Free Trade Zone held the opening ceremony. Dec. 2014, Tianjin, Fujian and Guangdong FTZs were approved by the central government. China Pilot Free Trade Zone was established on the intention of further opening-up and reform through which Chinese government would take the great leap in global market competition.

CONTENT China Pilot Free Trade Zone Overview Investment Opportunities in TJFTZ China (Tianjin) Pilot Free Trade Zone Introduction

Financial innovation beneficial to real economy CHARACTERRISTICS OF TJFTZ Dec. 12, 2014, Tianjin, Fujian and Guangdong FTZs were approved by Chinese government Apr. 20, 2015, China unveiled framework plans for Tianjin, Guangdong and Fujian FTZs, and 2015 new version of the Negative List. Feature3 Leasing development Feature2 Feature1 Coordinated development of Beijing-Tianjin-Hebei and the economic engine in North China Financial innovation beneficial to real economy Tianjin FTZ is the first of its kind in North China. Main distinctive features are:

TJFTZ-Location and positioning Tianjin Airport Area is 43.1 square km; Priority industry includes high-end manufacturing industries such as aviation & aerospace, machinery manufacturing, next-generation information technology, etc. Tianjin Port Dongjiang Area is 30 square km; Priority industry includes shipping & logistics international trade and leasing. Binhai CBD Area is 46.8 square km; Priority industry includes modern service industries focusing on financial innovation.

Major tasks and measures: TJFTZ FRAMEWORK PLAN Major tasks and measures: Accelerating functional transformation of government Streamlined administration makes government more efficient and effective. Setting up of enterprises becomes much easier and less time spent. Opening up of foreign and outbound investment The foreign investment outside the Negative List needs only filing procedures instead of approving requirement. Filling procedure is also applied on outbound investment. Promoting trading transformation and upgrade A "single-window" regulation and service system for international trade will be implemented.

TJFTZ FRAMEWORK PLAN Deepening innovation and opening up of financial services Pilot operations will first be conducted on interest rate liberalization, cross-border RMB use, foreign exchange administration reform, etc. Coordinating the development of Beijing-Tianjin-Hebei TJFTZ will play its role as an important junction connecting "China-Mongolia-Russia Economic Corridor" and major sea routes

TJFTZ UPDATE Task breakdown: a list of 90 detailed measures of framework plan have been issued. leading and supporting municipal commissions have engaged in planning and implementing industry development. National support: Related state administrations such as China Customs, MOF, Ministry of Transport have all released specific support measures, and more ministries are ready to unveil. Rapid growth of the number of newly registered enterprises: during the first month after TJFTZ’s opening, in all three areas, 4008 enterprises newly registered, 96.66% year on year growth. The total registered capital is 83.75 billion RMB , 193.76% year on year growth.

CONTENT China Pilot Free Trade Zone Overview Investment Opportunities in TJFTZ China (Tianjin) Pilot Free Trade Zone Introduction

I. EFFICIENT ADMINISTRATIVE SERVICES One seal approval: A comprehensive and integrated administrative review & approval mechanism will be set up. Mid-event control and subsequent supervision: The focus of administrative management procedures will shift from prior approval to mid-event control and subsequent supervision List of rights and responsibilities is open to the public and ready to be examined by the people.

II. OPENING-UP OF FOREIGN INVESTMENT Negative List administrative approach: The 2015 version of “Negative List” is even shorter and only contains 122 items. Some regulations and provisions concerning foreign investment are adjusted or terminated. Broadening opening-up fields: In the sectors such as shipping, commerce, professional, cultural and public services, advanced equipment manufacturing, information, market access restrictions will be suspended or cancelled on foreign investors' qualifications, share holding percentage, business scopes, etc. Filling procedure on foreign investment: foreign investment outside the Negative List will receive the same treatment as domestic investors by going through filling procedures instead of approving requirements. Foreign equity investment fund: improve the management of foreign capital settlement and investment fund, encourage foreign equity investment and start-up investment fund establishment. Protection mechanism of investor’s rights and interests: qualified foreign investors can transfer profits freely.

III. CONVENIENT OUTBOUND INVESTMENT PLATFORM Outbound investment under 300 million US dollars only requires filing rather than approval procedures. Restriction of foreign exchange on individual outbound investment is further reduced. Favorable tax and financial policy on outbound investment are provided. For example, income tax from the increase of assets through non-monetary asset investment can be paid by installment within 5 years. Qualified organizations are able to carry out direct investment, merger and acquisition, liability and other financial investment within a certain amount. Qualified foreign or domestic organizations and individuals can invest stock and futures market in China or overseas (both ways).

IV. UPGRADE OF NEW TRADING TYPES AND FUNCTIONS

V. FAVORABLE ENVIRONMENT OF SHIPPING INDUSTRY Promoting the opening-up of shipping industry: Chinese investors are allowed to hold less than 50% of equity of shipping companies, wholly-foreign-owned international ship management companies are permitted, the restrictions of foreign shares of international shipping and agent business are lowered, and foreign ships owned or indirectly owned by Chinese companies are allowed to pilot the coastal shipping. Building shipping finance center in North China: the development of international shipping finance center is encouraged, domestic and foreign shipping insurance and brokerage companies are encouraged to set up business entities. Supporting the setting up of on-shore delivery center of cruises supply and tourism marketing center.

VI. INTERNATIONAL TRADE FACILITATION China Customs issued 25 support measures in Tianjin, Fujian and Guangdong FTZs. Tianjin Customs released 18 new measures to support the development of Tianjin FTZs, including abbreviated import manifest, optional taxation (either of the finished goods or of the imported parts) for domestic consumption, diversified tax guarantee, AEO list etc,. Tianjin Inspection and Qualification made public of 12 innovations, such as third-party inspection and appraisal results to be accepted, etc,.

VII. OPENING-UP OF FINANCIAL SERVICES Tianjin version of FT account Companies are encouraged to leverage on both domestic and international market resources to facilitate cross-border financing. TJFTZ will pilot capital account convertibility: Qualified organizations are able to carry out direct investment, merger and acquisition, liability and other financial investment within a certain amount. Qualified foreign or domestic organizations and individuals can invest stock and futures market in China or overseas (both ways). Innovation of the financial services: offshore account and business, foreign exchange centralized operation by multinational companies, pilot establishment of licensed foreign or joint-venture banks, reinsurance

VIII. DEVELOPMENT OF LEASING INDUSTRY One distinctive feature of TJFTZ framework plan is to focus on leasing development. The State Council Approval in 2011 defined Dongjiang as China leasing innovation center. The framework plan points out that TJFTZ should push forward leasing policy innovation, create favorable leasing development environment and speed up the construction of China leasing center.

VIII. DEVELOPMENT OF LEASING INDUSTRY Supporting measures for leasing development in framework plan: Setting up of two platforms: to bring forward “China Tianjin leasing platform” and “Tianjin financial leasing assets registration publicity and circulation platform” Industry access: domestic and foreign investors enjoy the same treatment Business development: to support the setting up of SPV and the development of related factoring and forfeiting. Financing: to support overseas financing and the use of cross-border RMB Convenient supervision: to create innovative supervision of large equipment

VIII. DEVELOPMENT OF LEASING INDUSTRY DJ is the representative area of leasing innovation in china, the best comprehensive business platform conducting domestic, cross-border, bonded and non-bonded leasing. DJ is well-known for leasing development both at home and abroad. Until May 2015, registered leasing companies in Dongjiang is over 1097, headquarter leasing companies 282 and SPV companies 766. Total registered capital is 74.34 billion RMB. The total leasing assets are 30.53 billion US dollars, including 493 aircrafts, 11 aircraft engines, 71 international ships and 8 offshore oil drilling platform.

DEVELOPMENT OUTLOOK Through 3-5 years innovation and reform, TJFTZ will become a world-class free trade zone, with convenient trading and investment procedures, gathering high-end industries, comprehensive financial services, investor friendly regulatory environment, effective and efficient goods supervision, a leading role in the integration of Beijing-Tianjin-Hebei and economic transformation in North China.

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