Environmental Risks Remain Despite the Benefits of a Free Trade Zone in Shanghai

The establishment of China's first free trade zone (FTZ) in Shanghai in July this year epitomised Shanghai's position as China’s commercial and trade centre. Owing to its preferential policies, the new FTZ has already generated a great deal of interest among domestic and foreign investors.


Bolstered by excellent infrastructure, well-connected transport links and a long-established trade history, Shanghai offers an attractive investment climate for foreign businesses.


However, being China's wealthiest and most developed city, Shanghai is an expensive place to live and set up businesses. Therefore, the city’s business environment gives better support for higher value-added and relatively low labour-intensive service industries and advanced manufacturing.


According to the report, a large population and limited land area place resources and infrastructure in Shanghai under significant strain. Rapid growth and expansion have also led to increasing exposure of environmental issues, such as air and water pollution.


Despite improved capacity and increased emphasis on environmental protection, enforcement remains weak, especially with regard to preventive measures.


Furthermore, business assets in the city are exposed to elevated risks associated with tropical storms, due to Shanghai's coastal location. However, Shanghai’s relatively strong societal resilience means that impact from such natural hazard is likely to be short-term, and recovery is expected to be swift.

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