Beijing is expected to roll out further measures to boost the culture and entertainment industry as authorities aim to leverage and expand the role of the local cultural free port.
The duty-free port, located next to Beijing Capital International Airport in Shunyi District, is part of the Beijing Tianzhu Free Trade Zone. Opened a year ago, it provides a duty-free area for China’s art market, particularly for Beijing, which is home to about 80 percent of the nation’s art business.
Owners do not have to pay any import taxes as long as they store their collections at the Beijing Culture Free Port. If a piece is sold there, the buyer also doesn’t have to pay the value-added tax.
With this policy, some foreign auction houses such as Sotheby’s have set up business in the port, organizing art fairs and exhibitions.
However, Beijing has far greater ambitions for the free port, which is run by the municipal government-owned Gehua Culture Development Group.
According to sources, the government is considering multiple policies to boost business at the free port.
Among various measures, the centerpiece will be a set of financial policies that will leverage the free port’s status as part of a customs bonded area.
One of the favorable policies under consideration is to build an offshore financial market at the port to serve cultural companies. In the free port, financial institutions will be encouraged to set up outlets to do foreign exchange settlement, currency exchange and tax clearance services.
Private banks dedicated to serving the cultural and entertainment industry will be welcome in the free port. The port also plans to allow offshore cultural investment funds to be set up so that foreign investors will face fewer limitations in investing in China’s cultural industry.
Other good news specially designed for foreign investors could also include encouragement for foreign cultural and art insurance companies to operate in the free port. It will also provide convenience for foreign cultural and art funds to open in the port.
Another impressive measure is that the government wants to encourage finance leasing businesses by taking advantage of the port’s tax-free status.
The plan is to allow leasing firms and financial companies to store cultural and entertainment equipment at the port without paying import tariffs so that the equipment can be leased to cultural and entertainment operators in and outside the port at a much lower price.
Through this arrangement, cultural and entertainment companies, especially those in Beijing, will not need to spend on import tax for the equipment.
Various departments within Beijing government are believed to have reached a consensus on the need to boost the cultural industry. Support measures will be rolled out in phases.
Beijing’s ambition to boost the cultural industry comes amid China’s recent shift in the development strategy for the Chinese capital. On August 23, a guideline was released for coordinated development of the Beijing-Tianjin-Hebei region. According to the plan, Beijing’s role was defined as “the national political, cultural, international exchange and science & technology innovation center”.
It is worth noting that the role as economic center didn’t find a mention while the cultural center was moved up to the second place only next to the city’s unshakeable role as a political center.
This reflects Beijing’s ambition to build a strong cultural base as other cities step up competition.
Shanghai and Shenzhen, two other national bases for international cultural trade, pose direct competition to Beijing. Shanghai, in particular, is taking advantage of its status as China’s first national-level pilot free trade zone, to roll out many preferential policies to support cultural companies, especially foreign ones.
Meanwhile, Tianjin, which neighbors Beijing, also leverages on its growing financial market and newly-gained status as a free-trade zone, to attract cultural investors. Finance leasing companies in Tianjin, for example, have recently provided services to cultural and entertainment players, mostly in northern China, which also includes Beijing.
Fujian also announced plans to scrap shareholding and other restrictions for overseas investors in the cultural industry in the province’s free-trade zone.
With increasing competition from other places, it is not surprising that Beijing is anxious to stay abreast with the trends. It is fair to expect the Chinese capital to launch more incentive policies to encourage the development of the local cultural industry in the future.
– Contact us at [email protected]