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Ascending Trailblazer
Pudong achieves a rapid transformation encouraged by the reform and opening-up policy
Editorial | NO. 39 SEPTEMBER 27, 2018

When Tesla signed a deal in July to build a gigafactory in Pudong, Shanghai, the U.S. electric car maker made a conscious choice. It must have good reason for picking this specific site for its first factory outside the United States. The deal, the largest foreign-invested manufacturing project in the history of Shanghai, is evidence of Pudong's appeal to foreign investors. And indeed, the new plant will give Tesla easier access to the Chinese market, where the demand for new-energy vehicles is surging.

Since it adopted the reform and opening-up policy 40 years ago, China has opened its market increasingly wider. Notably, it has done so based on an incremental approach with pilot areas like Pudong serving as testing grounds.

In 1990, the central authorities made a decision to rev up the development of Pudong, then a backwater rural area east of the Huangpu River that bisects Shanghai, in a bid to inject impetus into the municipality's growth. Dubbed a "new area" to distinguish it from the special economic zones established earlier such as Shenzhen, Pudong began to unveil a string of incentives for foreign investment. These special policies helped it achieve a rapid transformation, creating a host of firsts in China, ranging from the country's first foreign-invested insurance company to its first large joint-venture retailer. The policies also allowed Pudong to experiment in new ways of tapping market forces, which would eventually be applied elsewhere.

In 2013, as China forged ahead with its reform and opening-up drive, Shanghai became the first in China to pilot a free trade zone. New policies such as a negative list, which specifies industries where foreign investment is prohibited, were introduced. The list is becoming shorter and shorter all the time, with the number of sectors listed dropping from 190 in the 2013 version to 95 in the 2017 one. In addition, Tesla can now set up a wholly owned enterprise in Shanghai because of the relaxation of joint-venture rules on foreign automakers.

Thanks in part to these innovative arrangements, Pudong's GDP skyrocketed more than 100-fold from 1990 to 965.1 billion yuan ($140.6 billion) in 2017. With one fifth of Shanghai's total area, it generates one third of the GDP of the coastal metropolis. The numbers are only part of the story. What is even more important is that Pudong has fostered promising industries, coupled with streamlining economic governance. It has not only become a new pole of growth for Shanghai, but also fueled progress along the Yangtze River and beyond.

At a time when the United States is resorting to isolationism and protectionism, China has reaffirmed its commitment to greater openness. President Xi Jinping has said on several occasions that China will not close its door to the world; instead the country will become more and more open. Built on best practices in the past four decades, China will continue exploring new frontiers with both boldness and prudence.

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