China Issues Special Measures to Ease Market Access in the Hengqin Cooperation Zone
Recently unveiled guidelines for the Guangdong-Macao Cooperation Zone in Hengqin focus on enhancing financial services, promoting tourism, driving innovation, and expanding healthcare access. Noteworthy initiatives include market access relaxation measures like establishing Sino-foreign cooperative art colleges, wholly owned medical institutions from Hong Kong and Macao, and facilitating medical beauty services. These measures also underscore a strategic commitment to economic dynamism within the Greater Bay Area.
On December 26, 2023, the National Development and Reform Commission (NDRC) and the Ministry of Commerce jointly released a set of measures targeting the Guangdong-Macao Cooperation Zone in Hengqin (hereinafter referred to as “Hengqn Cooperation Zone” or “cooperation zone”).
This comprehensive set of guidelines, titled Introducing Special Measures to Support the Guangdong-Macao In-Depth Cooperation Zone in Hengqin in Broadening Market Access (hereinafter referred to as the “new measures”), are strategically designed to boost the economic development of the cooperation zone, encompassing key areas such as modern finance, culture and tourism, sci-tech innovation, professional services, and pioneering methods for market access in the medical and health fields.
The plan echoes a broader project, comprising a Three-Year Action Plan for the whole Greater Bay Area (GBA) to make it a favorable environment for cross-border businesses and investments. It involves exploring the potential relaxation or removal of eligibility criteria, shareholding ratios, and industry access restrictions specifically tailored for investors from Hong Kong and Macao.
In this article we explore the key points introduced in the new measures, investigating their impact on the Hengqin Cooperation Zone’s business ecosystem.
Financial reform and cross-border facilitation
The new measures introduce several facilitations for cross-border banking and financial services, notably through the following actions:
- Facilitating financial services for Macao residents: This involves ensuring that Macao residents can easily access financial services within the Hengqin Cooperation Zone services, setting up smart government service terminals, and encouraging Macao banks to offer straightforward services. The goal is to create a simple and convenient financial environment for Macao residents.
- Supporting Macao’s innovation ecosystem: The idea is to bring in global money and resources to support innovative projects. By working closely with international financial institutions, the new measures aim to simplify the funding process for innovative businesses. This support particularly focuses on emerging industries like deep-sea exploration, space technology, biomedicine, and clean energy.
- Green finance initiatives: An important part of the new measures is the push for environmentally friendly finance practices. The Hengqin Cooperation Zone is urged to partner with various green financial service institutions. The goal is to encourage and offer green financial products and services, contributing to environmentally sustainable development in the Greater Bay Area (GBA) and beyond.
Boosting tourism and culture industries
The new measures aim to optimize the cultural and tourism industries within the Hengqin Cooperation Zone. This includes user-friendly measures such as streamlined policies for international tourists traveling across regions.
The guidelines also promote collaboration between Hong Kong and Macao in the tourism sector by allowing qualified joint ventures (JVs) or wholly-owned travel agencies in the Hengqin Cooperation Zone to operate outbound tourism services for mainland Chinese residents. This initiative directly caters to the needs of tourists in the GBA.
In terms of cultural initiatives, the new measures prioritize the establishment of an Hengqin International Performing Arts Island, accelerating the convergence of international cultural and performing arts resources. This initiative seeks to position the collaboration zone as a hub for cultural and performing arts development, attracting renowned producers, performance organizations, and artistic teams from Macao and other international regions.
Notably, the new measures also pledge support to the formation of Sino-foreign cooperative art colleges.
Optimizing high-tech, innovation, green areas
Establishment of an International Advanced Technology Application Center
In the field of high-tech and innovation, the new measures call for the establishment of an International Advanced Technology Application Center within the Hengqin Cooperation Zone. Leveraging the integrated and open system advantages of Hengqin and Macao, this center is designed to operate in a market-oriented manner. It aims to connect with prominent domestic and foreign research institutions, universities, and innovative enterprises to facilitate the application of advanced technologies.
Moreover, with the goal of attracting globally competitive tech enterprises, the measures envision the center as a focal point for innovative resources. The emphasis is on accelerating the gathering of cutting-edge technology innovations and high-end innovative elements.
Tailored models for scientific talents and research
The new measures introduce innovative models to attract top-tier talent, such as “Reside in Macao, Work in the Collaboration Zone” and “Conduct Research in Macao, Transform in the Collaboration Zone.” These initiatives establish a direct link between residence and work, allowing lead scientists autonomy in team selection and research fund allocation.
The research evaluation criteria include the implementation of third-party assessments and international peer reviews which will occur 3 to 5 years after the allocation of funds to evaluate the research quality, originality, and contributions of lead scientists and their teams.
In order to further simplify research efforts, a “White List” will be introduced, exempting certain materials used in scientific research from mandatory product certification. These include (but are not limited to):
- Samples; and
Intelligent unmanned systems across land, sea, and air
To facilitate the building of such an innovative environment, the new measures propose the development of intelligent unmanned systems across the Hengqin Cooperation Zone.
Leveraging key locations such as ports, industrial parks, city roads, underground pipelines, and aerial maritime transport routes, these systems will cater to various scenarios like logistics, transportation, environmental monitoring, city management, border control, and cultural tourism.
Establishing an international green energy certification platform
This initiative, in particular, supports key industry enterprises in jointly establishing an International Green Energy Certification Center, registered in Macao and operating within the Hengqin Cooperation Zone. The center will be focused on providing certification services to the GBA, Portuguese-speaking countries, and those participating in the Belt and Road Initiative (BRI).
The goal is to develop an international platform for certifying and trading green energy, leveraging blockchain technology to facilitate the entire lifecycle management of certification credentials, including generation, issuance, transactions, verification, and statistics.
This effort includes complementary features such as:
- Carbon asset management;
- Carbon trading; and
- Electric carbon measurement platforms.
Opening access to the medical and healthcare sectors
Traditional Chinese medicine market
This initiative encourages Macao’s healthcare institutions to conduct research and development, as well as production, of traditional Chinese medicine formulations within the Guangdong-Macao Medical Formulations Center. Additionally, it allows the center to undertake commissioned preparations of traditional Chinese medicine formulations for medical institutions outside Guangdong province.
Relaxing market entry for pharmaceuticals and medical devices
The new measures encourage studies on using real-world clinical data for registering pharmaceutical and medical device products. They also support the Hengqin Cooperation Zone’s market supervision departments in handling export sales certificates for Class II and Class III medical devices.
Enterprises in the zone can charge fees for domestically approved Class III medical devices based on pricing policies. Additionally, there’s a study underway to explore the convenient distribution of non-prescription drugs for Macao residents within the zone through a dedicated channel.
Loosening restrictions on Hong Kong and Macao medical institutions
The cooperation zone encourages the establishment of medical institutions in the cooperation zone, allowing wholly owned by Hong Kong and Macao investors or joint ventures in the cooperation zones. As such, several policies will be deployed to assist Macao service providers in launching various medical facilities, including clinics and outpatient departments.
The new measures also propose the enhancement of the cross-border referral mechanism between Hengqin and Macao, streamlining the referral process, as well as the establishment of an expedited ‘green channel’ for emergency referrals, thus ensuring efficient cross-border healthcare services.
Taking privacy into account, a pilot program will be initiated for the creation of a mutual recognition system for medical documents and examination results between Guangdong and Macao healthcare institutions.
Supporting the development of the high-end medical aesthetics industry
This initiative encourages renowned domestic and international medical beauty institutions to establish a presence within the cooperation zone. The zone will undertake research to compile a list of importers needed for the development of the medical aesthetics industry, including pharmaceutical companies, medical device manufacturers, and cosmetic enterprises.
Assistance will be provided to relevant enterprises for registration purposes. According to the new measures, foreign high-level medical beauty practitioners will be allowed to independently carry out medical beauty procedures after being registered as attending in charge according to relevant regulations.
Expanding market access in other sectors
Entering the data communication sector with ease
This measure underscores the commitment to foster a global internet environment akin to Macao’s. Beyond that, it supports the creator economy, suggesting the creation of a data metaverse center for digital trade innovation and international collaboration.
It also explores legal avenues for joint research network establishments between Zhuhai and Macao institutions.
Smoothing customs clearance and entry
The new measures envision a smoother customs clearance and entry process, including:
- Pioneering a single-sided declaration system for enterprises within the Cooperation Zone;
- Optimizing customs control modes for high-tech goods like integrated circuit products with vacuum packaging;
- Implementing a “one-stop inspection” for exit and security cooperation at Hengqin Port;
- Researching the feasibility of enhancing the functions of Hengqin Port for maritime transportation and opening relevant waters for Farad Yacht Terminal, expediting facility renovations; and
- Supporting the establishment of a direct transportation channel between Macao and Hengqin in specific zones, facilitating the movement of Macao residents to and from the Cooperation Zone.
Promoting innovation in Macao’s unique industries
This initiative focuses on stimulating unique industries in Macao through strategic measures:
- Tax-free processing for high-value imports: Leveraging the zone’s tax-free policy for priority goods to process and enhance the value of high-value materials imported from overseas.
- Empowering jewelry and jade enterprises: Supporting local and global jewelry and jade businesses to operate seamlessly within the Cooperation Zone. This includes activities like processing, identification, exhibition, and trade.
- Welcoming Macao’s culinary excellence: Encouraging well-known Macao catering brands and traditional cuisines to establish a presence in the Cooperation Zone. Streamlining customs procedures for food and raw materials, contingent upon certification from Macao authorities and customs approval. Existing policies will govern goods subject to import tariff quotas.
- Supporting Macao’s SMEs in distinctive industries: Actively backing small and medium-sized enterprises in Macao’s unique sectors, such as technology R&D, high-end manufacturing, traditional Chinese medicine, cultural tourism, and trade exhibitions.
Why invest in Hengqin?
Situated in the southern city of Zhuhai, Hengqin’s proximity to the Macao SAR, connected by bridges, tunnels, and ferry routes, positions it as an ideal location for cross-border business. The ongoing construction of the Macao Light Rapid Transit, set to open in 2025, will further streamline travel, enhancing accessibility.
Moreover, in 2023, the Hengqin Cooperation Zone released a set of interim implementation measures for the preferential individual income tax (IIT) available for certain employees working in the area. These measures detail specific eligibility for foreign and domestic high-quality and in-demand talent working in the cooperation zone to enjoy the preferential IIT policy.
The Hengqin Cooperation Zone also enjoys several reductions to corporate income tax (CIT) for companies operating in 150 sectors. In addition, the income derived from new overseas direct investment (ODI) from companies established in the area in the tourism industry, modern services industry, and the high-tech industry can be exempted from CIT. Specifics can be found in this article.
These strategic initiatives affirm Hengqin’s commitment to becoming a nucleus of economic dynamism within the GBA. It offers investors and businesses an unmatched gateway to success, blending a strategic location, forward-thinking policies, and advanced infrastructure.
China Briefing is written and produced by Dezan Shira & Associates. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Please contact the firm for assistance in China at email@example.com.
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