On June 10, 2018, President Xi Jinping announced at the 18th Meeting of the Council of Heads of Member States of the Shanghai Cooperation Organization (SCO) that "the Chinese government supports building a demonstration area in Qingdao for China-SCO local economic and trade cooperation".

The China-SCO Local Economic and Trade Cooperation Demonstration Area (SCODA) is of great political significance in serving the overall interests of China’s foreign affairs and strengthening the local government’s sense of mission. The State Council, in its reply to the General Plan for the Construction of the SCODA, pointed out that the SCODA should build a new platform for “Belt and Road” international cooperation in accordance with the decisions and arrangements made by the State Council. With the platform, China can expand cooperation in international logistics, modern trade, two-way investment, and business, travel, and cultural exchanges; allow Qingdao to effectively play its role in the construction of the “Belt and Road” New Eurasia Land Bridge Economic Corridor and maritime cooperation; strengthen the interconnection between China and other SCO states and shape a new phase of all-around two-way opening up with links running eastward and westward over land and sea.

Location Advantages

With a total area of 108 km2, the SCODA is situated on the north coast of Jiaozhou Bay in Qingdao, an open coastal city. Facing Japan, South Korea and the Asian Pacific Region in the east, connected to SCO countries in the west, ASEAN in the south, Mongolia and Russia in the North, the area enjoys an excellent location.

According to the General Plan, the SCODA is constructed within the Jiaozhou Economic and Technological Development Zone. It is located within the 15-minute economic circle of Qingdao’s “sea, land, air, and railway” transportation hub. This superior geographic location is anchored upon the center of an integrated transportation network of sea, land, air, and railway. The SCODA empowers Qingdao to play its role in the construction of the “Belt and Road” New Eurasia Land Bridge Economic Corridor and maritime cooperation. It is 10 km from Qingdao Jiaodong International Airport, 15 km from Qingdao Qianwan Port (a seaport), and 15 km from the SCO Multimodal Transport Center (a railway port). It is only half an hour’s drive to the downtown  area of Qingdao. Such a central location ensures efficient intermodal transport connections by land, sea, air, and railway.

Objective

The SCODA is built to leverage its superior geographic location in the center of Qingdao’s integrated transportation network of sea, land, air, and railway, and coordinate the intermodal transportation of seaport, land port, airport, and railway. It empowers Qingdao to play its role in the construction of the “Belt and Road” New Eurasia Land Bridge Economic Corridor and maritime cooperation. It operates in a “green” way that focuses on logistics pilot, trade expansion, production capacity cooperation, cross-border development, and two-park interaction.

Efforts are made to build the SCODA into a pilot area for innovation of two-way investment and trade systems among the relevant localities across the SCO states, an agglomeration area for business entrepreneurship and development, and a pioneering area for local economic and trade cooperation along the “Belt and Road,” so as to build a new high ground for opening-up in the new era.

Overall Plan

Pilot planning and all-round development underpin the blueprint for opening-up. To benchmark Xiong’an New Area, the SCODA highlights “international paradigm, humanistic sharing, three-dimensional intensification, ecological livability, and smart technology,” and pursues “utilizing the underground and air spaces efficiently”. In March 2020, the Architectural Design & Research Institute of Tsinghua University (THAD) and Shanghai Municipal Engineering Design Institute were commissioned to carry out urban design and underground space planning for the 10-square-kilometer core area. On June 20, the plan was approved at the review meeting attended by four CAE academicians including Wu Zhiqiang, Zhuang Weimin, Chen Xiangsheng, and Li Shucai, and the SCODA has since had its “compass.” The total building volume of the core area is 17.5 million m2, including 5.5 million m2 underground. Seven clusters are designed: SCO Plaza, Finance and Trade Cluster, SCO International Industrial Cooperation Cluster, Jinhu Service Cluster, Commerce Cluster, Tourism Cluster, and Cultural Exchange, Marine Cooperation, and Consulate Cluster.

Key Tasks

Enhance connectivity, building an international logistics center. Strengthen trade cooperation, building a modern trade center. Strengthen production capacity cooperation, building a two-way investment cooperation center. Enhance integrated development of business, tourism, and culture, building a business, travel, and cultural exchange and development center. Build a marine cooperation center. 

International Logistics Center

The international logistics center aims to build a "four ports in one" international intermodal transport comprehensive port by sea, land, air and rail, focusing on four aspects: smooth multimodal transport channels, agglomeration and development of modern logistics industry, optimization of multimodal transport comprehensive service functions, and international logistics cooperation. Work, is committed to building the SCO countries and the seaports along the Yellow River Basin to Japan and South Korea and other countries, and to build an international logistics that "connects Japan and South Korea to the Asia-Pacific in the east, Mongolia and Russia in the north, ASEAN in the south, and SCO countries in the west" big channel.

Functional Orientation:

Extensive international logistics cooperation. Smooth the international logistics channel. Gather and develop modern logistics industry.

Multimodal Transport Routes

Domestic Freight Trains  

Japan-South Korea Land and Sea Express Line

Eurasian Freight Train

Modern Trade Center

Build a pioneer area of local economic and trade cooperation along the Belt and Road, a leading area for multinational flow of factors and resources, and a demonstration area of bilateral and multilateral economic and trade cooperation. The works will mainly focus on expanding cooperation in cargo trade, areas of service trade, developing cross-border e-commerce, building international trade platforms, and promoting convenient trade services.

Function Positioning

Expanding cooperation in cargo trade

Support Qingdao to build a pilot designated supervision area for the import of special agricultural products from SCO countries. Accelerate the process of obtaining access permit for the high-quality agricultural products and food from SCO countries. Expand the import into China and transit to other countries of high-quality agricultural products from SCO countries. Build the bulk cargo platform for whole car, car parts, energy and raw materials, and develop used car export business. Support companies to set up products procurement and sales centers in partner cities such as St. Petersburg of Russia, Alta-AMA of Kazakhstan, and expand goods import.

Developing cross-border e-commerce

Rely on China (Qingdao) Cross-border E-commerce Comprehensive Experimental Area and encourage companies to set up cross-border e-commerce platforms, in order to aggregate companies and develop cross-border e-commerce. Organize online “SCO Local Special Products Exhibition”. Support the leading Qingdao companies to set up cargo distribution bases and “overseas warehouses”.

Expanding areas of service trade

Strengthening scientific and technological cooperation and exchanges with SCO countries and countries and regions along the Belt and Road. Facilitating international technology exchanges and introducing talents to better promote industrial upgrading and development. Building an international information sharing service platform, an international technology transfer and transformation platform, an international innovation talent exchange and introduction platform, and an international capacity cooperation platform.

Two-Way Investment Cooperation Center

The goal of the Two-way Investment Cooperation Center is to build a pilot area for two-way institutional innovation, a front-runner in comprehensive services, and a hub of talent, logistics, capital, information and technology for Belt and Road countries.

The Center will focus on 16 priorities in 6 aspects including expanding intercity cooperation network, strengthening R&D and processing cooperation, conducting modern agricultural cooperation, promoting interaction with international parks, facilitating the going-global efforts of eligible companies, and bolstering financial support.

Function Positioning: strengthening production capacity cooperation, and building two-way investment centers

1. Expanding intercity cooperation network. Strengthening and developing the existing sister-city and economic-partner-city relations, growing new partnerships with the goal of having at least one such city in each of the SCO member states. Holding two-way investment and trade promotion events in Qingdao and its sister cities and economic partner cities on a regular basis; hosting forums on economic and trade cooperation for the industrial and commercial community of economic partner cities to discuss local economic and trade cooperation.

2. Strengthening R&D and processing cooperation. Encouraging companies to carry out cooperation in new materials, biomedicine and other areas with companies and research institutes from relevant cities in SCO countries. Promoting technological commercialization cooperation of SCO countries, and enhancing the abilities of sci-tech incubation, technological R&D, industrial design, technique management and testing. Planning and building SCO headquarters economy and sci-tech innovation vehicles, improving incentive policies, attracting companies and institutions to set up regional headquarters, technological R&D centers, industrial design centers and incubators. Making full use of the resources and products of the SCO region and building processing bases.

3. Conducting modern agricultural cooperation. Setting up agricultural cooperation bases to engage in dry farming plantation and breeding cooperation with relevant cities in SCO countries. Introducing high-quality livestock species and facilitating the construction of livestock raising bases. Supporting Qingdao companies to engage in cooperation in ecological restoration and construction in Namangan Region, Uzbekistan and cooperation in agricultural resources development in Cambodia. Expanding research and cooperation in new agricultural technology, new species, new business forms, water-saving irrigation and other areas.

4. Promoting interaction with international parks. Strengthening cooperation with existing overseas economic and trade cooperation parks and zones in management, information sharing, industrial matchmaking and exchange of personnel, so as to realize two-way flows of resources and factors of production in the parks at home and aboard and promote development through interaction.  

5. Facilitating the going-global efforts of eligible companies. Providing quality services for eligible companies carrying out cooperation in SCO countries in such areas as home appliances, oil and gas, mineral products, environmental protection.

6. Bolstering financial support. Supporting Qingdao to introduce the regional operation headquarters, branches or business departments of financial institutions. Strengthening cooperation with multilateral development banks including AIIB, and Silk Road Fund, China-Eurasian Economic Cooperation Fund, SCO Interbank Consortium, etc., so as to provide financial support for the development of SCODA. The overseas parent companies of or subsidiaries controlled by companies registered in SCODA are supported to issue RMB bonds in Chinese mainland according to applicable laws and regulations. Supporting cross-border RMB business innovation of SCODA.

Business, Tourism and Culture Exchange Development Center

Build Qingdao into a famous international tourist destination, and a cultural innovation industrial center with global influence.

Functional Orientation: Promoting the development of tourism industry. Completing the renovation and upgrading of the landscape around Ruyi Lake, and build it into a hot scenic spot for popular tourist sites on the Internet. Holding the “SCO Local Tourism Development Forum”, and plan for the organization of SCO Local Cities Tourism Alliance.

Marine Science and Technology Cooperation

As Qingdao directly faces the sea, it is advantageous to facilitate the construction of the "Belt and Road" New Eurasian Land Bridge Economic Corridor and the maritime cooperation, by which, the marine and land transportations promote each other to form an open pattern of mutual assistance between the east and the west and the linkage between the land and the sea.

Functional Orientation: to be responsible for coordinating with the Marine Cooperation Center of the Shanghai Cooperation Demonstration Zone to promote special classes, to study and formulate the Marine Cooperation Center's key task promotion plans and organize their implementation; Promote cooperation in Marine science and technology, rational and comprehensive utilization of Marine resources, and Marine environmental protection with the SCO countries and the One Belt And One Road countries at the local level, establish an international platform for Marine cooperation and exchange, and explore innovative measures for Marine cooperation. To formulate development plans for Marine industries in the Shanghai Cooperation Demonstration Zone, conduct policy studies, and promote the development of Marine industries and Marine science and technology.

Qingdao China-SCO Countries Cooperation Hub

Building a Qingdao China-SCO Countries Cooperation Hub oriented toward the Belt and Road Initiative, influencing the Yellow River basin, and serving as the No. 1 Window, No. 1 Platform, No. 1 Passage, and No. 1 Harbor.

Function Positioning

International Business and Trade Exhibition

Featured with the concentration of countries, products and information, it aims to further connect with all kinds of resources from the SCO countries, governments along the Belt and Road, business associations, and companies, and to provide both online and offline display platforms for enterprises willing to enter the Chinese market.

International Commercial Service

Establish a commercial rule system that complies with international standards by leveraging the advanced concepts in the international market; create a legal environment that meets the requirement of the market economy; provide moved-in companies with commercial services that are common in the international community, including intellectual property protection, legal service, financial service, etc., and promote equity in rules, opportunities and rights.

International Business Travel Security

Respect the customs, local conditions, and cultural characteristics of different countries; establish supporting facilities such as restaurants, hotels, apartments, schools, religious sites, etc.

Preferential Policies

The State Admiration of Foreign Exchange has approved 10 preferential policies of the SCODA

Allow the implementation of the pilot program of payment facilitation of foreign exchange income under capital account;

Allow the external debt cancellation registration of the non-financial companies within the SCODA to be delegated to the banks, and remove the time restrictions for the companies to handle this procedure;

Allow the companies within the SCODA to be rid of geographical limitation, and able to handle the registration, changes and cancellation of domestic direct investment at any bank under the jurisdiction of the Qingdao Sub-Administration of the State Administration of Foreign Exchange. Allow the non-investment foreign-invested companies within the SCODA to participate in domestic equity investment with their capital funds, on the condition of genuineness, in accordance with the law and regulations;

Allow those companies within the SCODA that have chosen to obtain external debt loan through the "difference between investment and registered investment" to switch to prudent macro management of cross-border financing, which adjustment once made cannot be further changed;

Allow the companies within the SCODA to adopt different contract currency than its withdrawal currency and repayment currency in cross-border financing, but the withdrawal currency and repayment currency must be consistent;

Relax the administration of foreign exchange settlement of the capital obtained through domestic asset realization, and allow the capital on the account of domestic asset realization to be settled directly;

Lower the entry threshold for the centralized operation of transnational corporations' cross-border funds, and adjust the scale of domestic and foreign currency balance of payment to over 50 million USD in last year;

Relax the administration of guaranteed utilization and foreign exchange settlement, so that foreign investors could use their guarantee for capital contribution, foreign exchange settlement payment and other purposes once they win the bidding;

Cancel the limit on the number of capital accounts opened, so that market entities could open multiple foreign exchange accounts under capital accounts as per business de