Shanghai Free-Trade Zone: Tesla opens first factory independently owned by foreign firm in China

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It's been five years since Shanghai established its free trade zone. The city pioneered a series of economic and social reforms through the zone. These helped attract US electric automobile-maker Tesla to open its first overseas factory there. Han Peng has more.

When it comes to opening up its market to foreign companies, Washington has accused Beijing of sanctioning the theft of U.S. intellectual property, forcing U.S firms to transfer technology in return for access. But that's not an issue for one US automaker.

Last month, Elon Musk, CEO of the U.S. car brand Tesla, visited Shanghai and announced the opening of its first factory outside the United States.

HAN PENG SHANGHAI "So what's different about this? If a foreign car brand wants to open a factory in China, take this Toyota plant, for example, it has to set up a joint venture with a local automaker. That's the case here with First Automotive Works, and why it's called FAW-Toyota. It's a 50-50 split in ownership."

But Tesla's new factory is 100 percent owned by Tesla. It's the first car factory in China owned entirely by a foreign company. The credit goes to the Shanghai Free-Trade Zone, a five-year-old testing ground for Chinese economic reforms to open the country's markets further to foreign companies.

HUANG OU, DEPUTY DIRECTOR SHANGHAI MUNICIPAL COMMISSION OF ECONOMY & INFORMATION "This is a pilot project by Shanghai to reflect the central government's call for the removal of foreign equity limits in the automobile manufacturing industry."

Some say China is using the access of its huge market as a leverage to force Western car brands to give away some of their intellectual property, a claim China denies.

HUANG OU, DEPUTY DIRECTOR SHANGHAI MUNICIPAL COMMISSION OF ECONOMY & INFORMATION "As to technology transfers, it's a company matter. We don't have any intentions to make regulations."

Tesla is the largest foreign investment project for Shanghai. The new factory aims to produce more than half a million electric cars a year. This move comes despite the ongoing trade tensions between China and the United States. Analysts say if Tesla proves successful in the Shanghai Free-Trade Zone, it's hoped other independent U.S. businesses will be allowed into China. Han Peng, CGTN, Shanghai.