Shenzhen will be granted autonomy to make its own laws on artificial intelligence and big data, relax visa restrictions to attract foreign talent, and start a stock futures index under the latest plans to boost its role as tech and finance hub.
The National Development and Reform Commission (NDRC) published a list of 40 specific areas in which Shenzhen could make reforms or undertake new ventures in coming years.
The city has been earmarked as a model for the country’s development and the new measures aim to develop six areas: financial markets, the business environment, technology and innovation, international cooperation, public services and city management.
“Over one hundred existing laws and policies will have to be adjusted along with the proposed reforms. This is innovative and groundbreaking, and also shows the effort and determination of the central government in further reforming [Shenzhen]” Ning Jizhe, vice-chairman of the NDRC, told a press conference on Sunday.
The key measures include giving Shenzhen greater autonomy to make laws in areas such as artificial intelligence (AI), big data, biotechnology, unmanned aerial vehicles and self-driving cars.
The government document also further detailed policies that would enhance its ability to attract foreign talent to work and invest in the city, including a simplified route for foreigners to apply for visas for vacancies where their skills are needed and for highly skilled workers to gain permanent residency.
Shenzhen will also start a stock futures index, and encourage innovative companies to pursue initial public offerings on the Shenzhen Stock Exchange, the document said.
The detailed measures follow a speech by President Xi Jinping last week to mark the 40th anniversary of its designation as a special economic zone, in which he promised to give the city more autonomy for its “next stage of reform”.
Xi said these reforms would help it to become a world-class innovation powerhouse and model of economic reform for the nation in a time of global “turmoil and change”.
He also said Shenzhen would be an important engine to drive the development of the Greater Bay Area and promote the integration of Hong Kong and Macau.
Last week, Beijing issued a broad new five-year plan for Shenzhen, home to some of the country’s leading technology companies including Huawei, Tencent and drone maker DJI.
“Our goal is that by the end of next year, Shenzhen’s business environment will be ranked in the top 20 in the world according to the World Bank’s standards. By 2025, we will need to make Shenzhen into one of the world’s most advanced cities and a top choice for innovative start-ups and investments,” Shenzhen’s mayor Chen Rugui told Sunday’s press conference.
Peng Peng, vice-president of the Guangdong System Reform Research Society, a government-backed think tank, said the latest reforms showed that Shenzhen, which has been administered by the Guangdong provincial government, now has “many powers like Guangdong”.
“Some of the areas in which [decision-making] power has been delegated to Shenzhen have not even been given to Guangdong. Therefore, the status of Shenzhen may now be understood to be almost like a municipality, or a ‘specially administered city’,” Peng said.
Cities that have been given municipality status – including Beijing and Shanghai – answer directly to the central government and are exempt from certain taxes.
Jeffrey Towson, a former professor of investment at Peking University, said new rules on visas and residency permits would be a “big improvement” because attracting foreign talent would be the biggest factor in the city’s future success.
“[New laws on] autonomous vehicles and drones could be another area [to help Shenzhen]. These are [now] quite restrictive in China versus other countries,” Towson said.
The NDRC also called for the development of stock index futures contracts based on the Shenzhen Stock Exchange.
Stock index futures contracts covering the CSI 300 stock index, the CSI 500 stock index, the SSE 50 stock index are currently traded on the China Financial Futures Exchange.
The first two indexes, the CSI 300 and CSI 500, include stocks listed on both the Shanghai and Shenzhen exchanges, while the SSE 50 index reflects the performance of 50 stocks trading on the Shanghai bourse that have demonstrated good trading liquidity. Currently, there is no futures contract that tracks an index on the Shenzhen Stock Exchange alone.
Some analysts said there could be potential demand from investors for new index futures based on the ChiNext Index, which tracks the largest 100 stocks trading on the Shenzhen tech board for start-up companies.
“There is a lack of hedging instruments for companies that are trading on Shenzhen’s ChiNext board. The addition of index futures products could make the Shenzhen Stock Exchange more competitive,” said Bruce Pang, head of macro, strategy research at China Renaissance.
The NDRC also called for further implementation of the registration-based IPO system on the ChiNext board.
In June ChiNext started implementing registration-based public offering rules, which enable faster IPO vetting.
This put the decade-old ChiNext on the same footing as the Science and Technology Innovation Board (Star), Shanghai’s Nasdaq-styled tech board that was launched in 2019 and has had great success.
The NDRC has also called for more innovative enterprises to be listed on the Shenzhen Stock Exchange, adding that these enterprises can list via China depositary receipts to attract foreign companies.
Depositary receipts are certificates issued by a bank representing shares in a foreign company listed elsewhere.
Professor Lau Siu-kai, a vice-chairman of the Chinese Association of Hong Kong and Macau Studies think tank in Beijing, said Hong Kong should work more closely with Shenzhen.
“We should not see helping in the development of Shenzhen is to create for ourselves a new rival,” he said.
“With the new situation, Hong Kong should learn to co-operate or co-ordinate with Shenzhen. It is not a zero-sum game but win-win.”
