FTZ a major measure of China to expand opening up
By Luo Shanshan and Wang Ke
People's Daily app
1542628818000

At 5 am each Friday, Hu Changwang, business manager of a Chongqing-based logistics company, would arrive at Chongqing Jiangbei International Airport to receive the tiger prawns his company imported from Thailand.

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Yangshan Free Trade Port Area, part of China (Shanghai) Pilot Free Trade Zone. (File photo: VCG)

According to him, the routine inspections of each batch of goods can be completed in four hours. Thanks to the 24/7 customs service adopted by Chongqing Customs in the pilot free trade zone (FTZ), the import of live prawns is now running at much higher efficiency.

Such convenience is the result of China’s pilot FTZ construction.

China (Shanghai) Pilot Free Trade Zone was launched in September 2013. It covers the Waigaoqiao Bonded Area, Waigaoqiao Free Trade Logistics Park, Yangshan Free Trade Port Area and Pudong Airport Free Trade Zone, a total area of 28.78 square kilometers. It is a new testing ground for China’s reform and opening up.

Shanghai’s experience was replicated. Guangdong, Tianjin and Fujian established pilot FTZs in April 2015, with Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan and Shaanxi following in August 2016. Hainan also set up its own FTZ in April this year.

China has established 12 FTZs over the past 5 years. As pioneers of reform in investment, trade and duty transformation of government, the FTZs have created innovative mechanisms, becoming role models of China’s reform and opening up in the new era.

According to statistics from China’s General Administration of Customs, total trade from China’s FTZs hit 2.6 trillion yuan in 2017, up 23.38 percent from a year ago. In the first three quarters of this year, it reached 2.4 trillion yuan, rising 14.03 percent from the same period last year. The growth is 4.13 percentage points higher than the national foreign trade of the same period.

From Shanghai to Hainan, mechanism innovation has swept the country. Volvo Construction Equipment Investment (China) Co., Ltd. has long built its manufacturing base in Jin Jing Road, China (Shanghai) Pilot Free Trade Zone. Three years ago, Volvo set up a financial leasing company there again, becoming the first foreign-owned enterprise to establish a company of its kind after the expansion of the China (Shanghai) Pilot Free Trade Zone.

“The innovative measures of China (Shanghai) Pilot Free Trade Zone, such as the negative list approach, enhanced our confidence in investing in Shanghai,” said Zhan Xu, vice president of Volvo Construction Equipment Investment (China) Co., Ltd. He believes that new management mechanisms have continuously eased market access, allowing the company to expand its business to upper and lower streams of the industry.

Over the past 5 years, the FTZs focused on institutional innovation, generating a series of replicable experiences in foreign capital management, trade regulation, and government administration.

As a result, the foreign capital management system has been improved. Since China (Shanghai) Pilot Free Trade Zone issued the country’s first negative list on foreign investment, the items on the list have been reduced to 45 from 190 over the past 5 years.

In addition, the reform of China’s trade regulation system is also steadily progressing. So far, the “single window system” of China (Shanghai) Pilot Free Trade Zone has covered 22 central and regional departments and units, saving a total of over 2 billion yuan for enterprises. Taking the integration of customs service and inspection as an opportunity, China (Shanghai) Pilot Free Trade Zone will make further reforms in the customs clearance process.

According to the report, ”Doing Business 2019: Training for Reform,” issued by the World Bank this October, China, endeavoring to improve its business environment for cross-border trade, has moved up from 97th last year to 65th this year.

The report said China has reduced both time and cost of cross-border trade by adopting the “single window system” that cancels administrative fees, enhances transparency and encourages competition. The cost to import (border compliance) has been reduced to $326, from $745.

What is a Free Trade Zone?

It is a special area outside a sovereign country’s or region’s customs where foreign products, exempted from tariffs, can get more preferential trade agreements on trade and investment than related regulations of the World Trade Organization. It is a quarantine area of tariffs that adopts free port policies.