China opens up Shanghai to global tech entrepreneurs and talents

China has been a hub of entrepreneurship for many years now. From the Zhongguancun technology hub in Beijing with Baidu and Sina, to Alibaba in Hangzhou, to Tencent and Huawei in Shenzhen, innovation and entrepreneurship is a large part of China’s ongoing economic growth and reform.

Now China is ready to take its next steps as a greater global hub of entrepreneurship by opening up Shanghai, which is set to be the first testing ground for new entrepreneurial residence and immigration policies, according to new regulations unveiled last week by China’s Ministry of Public Security. Starting with the removal of external and internal labor market restrictions to encourage entrepreneurship in the technology and service industries in Shanghai, China’s government is taking the next steps in its market-oriented economic policies, opening its economy further, and attracting foreign talent to start businesses.

The Shanghai municipal government’s originally reported announcement on June 3rd included measures for building facilities for startups, a technology research university, science laboratories, and other measures to attract worldwide talent. The policies then escalated quickly in a State Council meeting, calling for a loosening of residency and educational degree requirements as barriers to entry in China’s entrepreneurship market. A fanfare website was also set up in support of “Shanghai as a technology and innovation center with global impact” (建设具有全球影响力的上海科技创新中心).

On June 9th, the central Ministry of Public Security officially endorsed the policy, set for implementation on July 1st.

According to a Ministry of Public Security official, “advancing the construction of Shanghai as a technology and innovation center is a major initiative of China’s forging of new heights in the technology sector that have global impact under “the New Reality[*]”, referring to comprehensively deepening reform, advancing development strategies that are driving innovation, and enhancing the significance of the country’s core competitive ability.”

A major thrust of the initiative is a change in labor market policies. Premier Li Keqiang specifically announced on June 4th that China would eliminate “hukou” residency and degree requirements that have restricted the freedom of movement of labor in China in the past.

Note: Hukou residency is based on the town or region of one’s birth in China, and is often a requirement for employment at firms in major cities. It has traditionally taken many years to obtain residency in a major cities like Shanghai and Beijing.

The policies are intended to encourage business startups, hire the best talent available, increase China’s competitiveness, and relieve pressures in the employment market. The measures originally announced by the Shanghai government on June 5th included:

• a reduction from 7 years to between 2-5 years to wait for a “hukou” residency in Shanghai.
• a reduction in green card application wait times to less than 90 days for foreigners.
• an entrepreneurship enabling policy that will let university researchers start companies while studying and let students work part-time in startups.

The central Ministry of Public Security in Beijing then took the plunge, introducing centrally sanctioned residence and visa changes in Shanghai in an announcement entitled “A Reading on the Relevant Entry and Exit Policy Measures for the Carrying Out of Support for Shanghai as a Technology and Innovation Center“.

According to the subsequent Ministry of Public Security announcement:

“In total 12 projects have been cleared for implementation to increase the attractiveness of China to top-level foreign talent, to improve the level of incubator support for young startups, to spur on the mobility of China’s domestic talent, to upgrade the level of specialized immigration services and others. This will offer a fast and convenient immigration environment for the construction of Shanghai as a technology and innovation center, as well as the finest residency treatment of foreign talent and the most efficient immigration (entry/exit) service.”