Shanghai’s Pudong district plans to offer tax incentives to overseas bankers, brokers and insurers to help it become a global financial center and head off challenges from Tianjin and Shenzhen.
Pudong will offer rental subsidies, tax rebates, free annual health checks and ease the process for foreigners to become Shanghai residents. The incentives, which will last until end of 2010, are being discussed with China’s tax authority, district chief Li Yiping said.
“To create a financial hub like the City of London or Wall Street, we need financial experts and overseas talent,” Li’s deputy Yan Xu said in an interview in Beijing. “We need financial-industry workers with technical expertise that can come up with creative ideas, innovative products.”
Pudong, already the China base for companies including Citigroup Inc. and HSBC Holdings Plc, is facing competition from Shenzhen and Tianjin to attract insurance companies, banks and brokerages. The government in March approved Tianjin’s bid for special status as a financial zone and the city is vying to become the base for trading of offshore yuan forwards.
About 10,000 people work at Pudong’s 520 local and overseas financial companies, accounting for as much as a quarter of Shanghai’s economy and making it China’s financial center.
Employees of overseas financial companies will get a 200,000 yuan (US$29,000) one-time rental subsidy and a 20 percent tax rebate, while their chief representatives will get tax subsidies of as much as 40 percent, according to the plan.
“This is very welcoming news,” said Stacy Kwok, PricewaterhouseCoopers’ Shanghai partner.
The local government “has been quite focused on developing Pudong as an international financial center,” she said.
Pudong is one of 19 districts that form Shanghai, a municipality of 17 million people. The area’s economy has grown by an annual average of 18.2 percent since 1990, as paddy fields gave way to skyscrapers.
The district is already the base for 173 banks, 202 brokerages, 145 insurers and the larger of China’s two equity bourses, as well as exchanges that trade gold, diamonds and commodities, Yan said.
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