THE Central Government announced Sunday the lifting of restrictions on foreign investment for several industries, from green tea to civil airplane engines, in the Shanghai free trade zone.

    The new rules affect 27 industries, including automobiles and infrastructure, and represent a mix of concessions over the rules that apply elsewhere on the mainland.

    Some of the limits on industry investment by foreign companies in joint ventures with Chinese firms will go from 49 percent to 51 percent or greater, including in the shipping industry, the State Council said on its website.

    In some other industries, such as companies developing high-speed rail technology, passenger trains, yachts and luxury liners, sole foreign ownership will be allowed in the Shanghai zone, whereas elsewhere in China the firms must have a local partner, the statement said. Foreign companies producing traditional Chinese tea will be allowed in the Shanghai zone under joint ventures, whereas elsewhere they are not allowed at all, the statement said.

    The Chinese Government has acknowledged the need for long-term reforms of the country’s slowing economy to shift away from a model based on trade and investment in factories.

    Piecemeal changes so far have included easing controls on bank lending and the free trade zone established in Shanghai in September 2013.

    But the Central Government has yet to tackle fundamental changes such as curbing the dominance of State companies that the previous generation of leaders spent the past decade building up.

    The 29 square kilometer Shanghai free trade zone was meant to test broad economic and financial changes, including currency liberalization, market-determined interest rates and free trade.

    The area, however, has stumbled because many of the Shanghai FTZ’s preferential policies have been on a nationwide basis, including cross-border cash pooling and netting for multinational companies, detracting from what was meant to be the exclusive nature of policies within the zone.

    Newly registered foreign enterprises accounted for 12 percent of the more than 10,000 firms allowed to operate within the zone by the end of June, official data showed. Excluding Hong Kong and Taiwan, foreign companies comprised just 6 percent, or 643 entities, far fewer than expected.(SD-Agencies)