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Free trade zone forging new paths
Print Edition
The inclusion of more areas in the China (Shanghai) Pilot Free Trade Zone is a major task entrusted to Shanghai by the central leadership on the fifth anniversary of the establishment of the country’s first such zone.
Shanghai Party Secretary Li Qiang visited the zone on November 14.
The next day, Ministry of Commerce spokesman Gao Feng told reporters that “specific plans are being considered for the work to include new areas in the Shanghai free trade zone, and further details will be announced in due course.”
Zhu Ming, deputy director of Shanghai Development and Reform Commission, said a task force had been established and the criteria for the new areas mainly depended on their development in fields reflecting national strategy needs, international market demand and the high requirement for openness, their performance in investment and trade facilitation and their cutting-edge advantages in international competitiveness.
Since it was established in September 2013, the free trade zone has explored new paths and accumulated experience for deepening China’s reform and opening up.
Last month, the World Bank released its latest global assessment of business environments, and China now ranks 46 out of 190 countries and regions, up from the 78th place last year.
By the end of June, more than 55,000 enterprises had registered in the Shanghai free trade zone, a fifth of them foreign-funded. The zone also houses over 250 regional headquarters of multinational conglomerates and reported imports and exports totalling 6.08 trillion yuan (US$885 billion).
Over the past five years, the 1.0 edition of the zone mainly focused on reform of the foreign investment management system driven by the initiation of a “negative list” as well as reform of trade supervision through the establishment of a unified “single window” approval system for foreign trade.
In the second stage, efforts were made to reform in-event control and subsequent monitoring and the establishment of modern governance after the zone expanded from 28 square kilometers to 120 square kilometers in April 2015.
The issue of a plan for comprehensively deepening reform and opening up in the zone last year marked the launch of the 3.0 edition. At this stage, free trade account led the constant openness of financial sector.
Of the upcoming 4.0 edition, Zhu said: “Shanghai has more tasks to accomplish.”
“The Shanghai free trade zone should explore more effective opening measures in the key areas of telecommunications, culture, education and medical care, and improve the systematic approach of institutional innovation by further opening up and transforming government functions,” he said.
“Our restrictions on foreign investment mainly focus on the ratio of shares, while those in developed countries are mainly behavioral restrictions. In practice, behavioral restriction is better to achieve the policy objective.
“Our reform and opening up should finally be reflected in competitiveness, and the Shanghai free trade zone should play a greater role in coping with the new situation of the global economy.”
The zone has generated 127 institutional innovations that can be replicated throughout the country in the past five years. After Shanghai, 11 more pilot free trade zones were established in China.
In the reform of financial sector, the construction and application of the free trade account system is widely considered to be a fundamental role to promote the convertibility of the capital account and the opening of the financial market.
Through the free trade account system, enterprises and financial institutions in the zone can independently carry out overseas financing and are less subject to foreign exchange control.
By the end of April, 56 financial institutions in Shanghai had opened more than 71,000 free trade accounts. Enterprises obtained 1.2 trillion yuan of financing in domestic and foreign currency through free trade accounts.
The free trade account system will be applied in free trade zones in the Yangtze River Delta region and along the Yangtze River in the future.
The latest expansion of the Shanghai free trade zone in April 2015 included Zhangjiang High-tech Park, Jinqiao Export Processing Zone and Lujiazui Financial and Trade Zone.
After five years of operation and development, the industrial layout of the free trade zone is clear — the Yangshan bonded area mainly focuses on international trade and shipment, the comprehensive bonded area of Pudong International Airport emphasizes air transport, the Lujiazui area engages in finance and trade while Zhangjiang develops science and technology industries.
At present, Shanghai is deepening its reform in in-event control and subsequent monitoring through a unified approval system. It will further lower the authority for examination and approval from the municipal government to the Pudong New Area in the next step in line with the requirements of the central leadership to give pilot free trade zones greater autonomy in reform.
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