Officially launched in Waigaoqiao, Shanghai on September 29, China (Shanghai) Pilot Free Trade Zone issued on the same day Special Administrative Measures (Negative List) on Foreign Investment Access to the China (Shanghai) Pilot Free Trade Zone"(the "Negative List"), of which six provisions regulate vessels and marine engineering equipment.

As stipulated by the Negative List: the design of luxury cruise, design of low/medium-speed diesel engines and their components, design and manufacturing of yachts shall be limited to equity or cooperative joint ventures only; the manufacturing of low/medium-speed diesel engines and crankshafts for vessels shall be carried out where the equity is controlled by Chinese party; the design and manufacturing of machinery for ship cabins shall be carried out where the equity is controlled comparatively by Chinese party; the design and manufacturing of vessels (sub-block included) shall be restricted and the equity shall be controlled by Chinese party; the repair of marine engineering equipment (module included) shall be carried out where the equity is controlled by Chinese party; and the repair of vessels (blocks included) is restricted, and the equity shall be controlled by Chinese party. For sectors falling outside the “Negative List”, foreign investors and domestic investors will go through filing procedures instead of approving requirement, with the exception of areas specially defined by the State Council. The approving requirement on foreign investment contracts and Articles of Association will be replaced by a filing procedure.

According to industry insiders, the regulations placed over vessels and marine engineering equipment by China (Shanghai) Pilot Free Trade Zone are in substantial agreement with pertinent national policies and measures. While rigid controls are found over ship building and maintenance sector which has seen excessive production capacity in the country; restrictions are unleashed for marine engineering equipment. As for auxiliary vessel components, restrictions will only be set over diesel engines and cabin machineries; all other categories will be completely unleashed. All those “free” and “unleashed” areas are just the weakest points of China’s vessel industry. Those measures, therefore, will give an enormous impetus to the acceleration of the restructuring, transformation and upgrading of the vessel industry, facilitating China’s vessel and marine engineering equipment sector to grow bigger and stronger.