Developments at Shanghai Yangshan deep water port

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Nov. 2 – On the islands of Xiao Yangshan and Da Yangshan, some 30 kilometers south of Shanghai, Phase 1 of this major new facility opened in December 2005, with five container ship berths. The port lies at end of the 32.5-kilometer Donghai oversea bridge. It is expected to have a throughput of 3m TEUs by the end of this year, primarily from Europe-China lines transferred from Waigaoqiao Port. Phase 2 with a further four berths will be complete by the end of 2006, at which time lines to North and South America will transfer. Major construction work was visible during our visit. By 2010, there will be 15 berths, with a total annual capacity of 10 millions TEUs; by 2020, the facility will have 53 berths.

The port is also now a state-level free port, China’s first, and covers an area of 7.2 sq km in three parts – 1.2 sq km in the port, the 32.5 kilometer Donghai Bridge itself, and a 6 sq km area at the north end of the bridge in Lingang New Area. This free port is the most open area yet created in China and within these areas existing policies applied to bonded zones, export processing zones and bonded logistics parks will be implemented import duty and taxes are suspended until the goods are removed from the free port into the domestic market domestic goods shipped into the free port are considered exports and entitled to tax refunds goods transactions within the free port are not subject to VAT and consumption tax.

The Yangshan free such forms a free trade area of large size with the multiple functions, including transshipment, distribution, processing, procurement and international trade. Notably, manufacturing processes can take place in the port that change the Customs HS code of products.

These enhancements to the policy environment at Yangshan mean that the port can begin, in due course, to challenge the current dominance of Hong Kong and Singapore as regional transshipment and logistics centers. Indeed, officials aim to make Yangshan and Lingang northeast Asia’s primary hub port.

There has been some concern in shipping circles that the port, with its long bridge connection, could be vulnerable to disruption to typhoons or heavy fog. However, officials reported that the bridge had so far only been closed for “few hours, not a whole day” due to weather conditions.

The future relationship of Yangshan to other ports in the region remains to be seen. Officials accepted that Ningbo, for example, was a “competitor to some extent” with Yangshan, but noted that the Zhejiang city focuses more on oil, ore, liquid chemicals and other bulk cargo, while Yangshan is primarily a container port. Equally, Waigaoqiao is regarded as a “brother port” and Zhangjiagang as a potential feeder port for Yangshan.

Lingang New Area will be Shanghai’s biggest satellite city with a planned population of 500,00 to 800,000 people. It includes:

  • A heavy equipment zone (36 square kilometers), for the production of ultra-heavy, super-sized, over-limit equipment for the rail, automotive, shipping and aviation industries – it includes 7.8 kilometer of coastline and its own dedicated port.
  • A general industrial zone (101.6 square kilometers) for industries such as IT, auto parts and general machinery high tech zone (42.1 square kilometers) logistics park (21.4 sq km), of which 6 square kilomter is bonded as part of the free port, as well as a warehousing and transshipment area.
  • A railway station for container trains an inland river dock (not yet operational).
  • New facilities are under construction for the Shanghai Maritime University and the Shanghai Maritime Goods University.
  • The Harbor New City for commercial and residential use – this has a 5.6 sq km artificial lake – however, no residential housing has yet been constructed here there will be a metro connection to the city center, although its completion date is unclear.

Dezan Shira & Associates maintains offices in Shanghai, advising foreign investors on legal administration, corporate establishment, due diligence and tax policy in the city. Please contact Olaf Griese for more information.

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