China Expands FTZ Pilot Program to Promote Trade and Reforms
China is expanding its free trade zone pilot program to some underdeveloped provinces to bolster local economies and beef up trade ties with neighboring countries as the world’s second-largest economy is locked in the trade war with the United States.
The State Council, China’s cabinet, announced a plan Monday to set up six new free trade zones (FTZs), increasing the number of pilot zones in the country to 18. In China, FTZs are designated geographic areas with preferential business and trade policies that are intended to encourage international business while testing economic reform measures.
The new FTZ locations include coastal provinces Shandong, Jiangsu and Hebei, landlocked provinces Guangxi and Yunnan, and the rustbelt province of Heilongjiang in northeast China.
Wang Shouwen, a vice minister of commerce, said that by adding the new zones, China’s free trade zone pilot program will cover all of the country’s coastal provinces. Meanwhile, building FTZs in some of the underdeveloped, border provinces will promote reforms in the region and encourage cross-border trade.
Shandong and Jiangsu are China’s second- and third-largest provincial economies, while Guangxi, Yunnan and Heilongjiang are among the poorest.
“The arrangement will help to optimize China’s strategic layout of pilot FTZs, and also serve major national strategies such as the Belt and Road Initiative,” Wang said.
The southwest province of Yunnan borders Vietnam, Laos and Myanmar, while the southern autonomous region Guangxi also borders Vietnam. Heilongjiang, one of China’s old heavy-industry hubs, borders Russia in the northeast.
The total area of the six new trade zones will cover nearly 120 square kilometers, according to a document on the new FTZ plan released Monday. Each zone will have its own focus and reform missions based on their geographic features, according to the plan.
For instance, the FTZ in eastern coastal Shandong will focus on industrial upgrade, maritime economy development and promoting economic cooperation with Japan and South Korea.
At a press conference Monday, Ren Airong, deputy governor of Shandong, said the new FTZ, which covers part of the capital city Jinan and part of Qingdao and Yantai, will test measures to speed up customs clearance with Japan and South Korea. The province will also support foreign investors to set up vocational training institutions and invest in aviation transportation service business in the FTZ, and will encourage foreign-funded companies to participate in the formation of standards for hydrogen fuel cell vehicles. The FTZ will also test reforms in automobile and crude oil import business.
Construction projects in the Shekou Free Trade Zone in Shenzhen. Photo: VCG
The Jiangsu FTZ will serve as a nexus of the Belt and Road Initiative and focus on industrial transformation, according to the plan. Guo Yuanqiang, deputy governor of Jiangsu, said the new FTZ in his province will test the waters for greater capital account liberalization and easier equity investment for foreign investors.
The Guangxi FTZ will seek closer cooperation with countries in the 10-member Association of Southeast Asian Nations in new-energy vehicles, health care, big data and artificial intelligence, said Yang Jinbai, deputy governor of the Guangxi Zhuang Autonomous Region. Guangxi will also push forward e-commerce cooperation between China and Malaysia in the FTZ, Yang said.
The Hebei FTZ will support the regional integration of Beijing, Tianjin and Hebei, focusing on development of big data, digital trade and green finance. Yunnan will promote cooperation with Southeast Asian countries in cross-border insurance and other financial service businesses, while Heilongjiang will seek to deepen China-Russia trade ties.
China unveiled its first FTZ in Shanghai in 2013, a zone that has tested a series of reform measures involving investment, finance and trade. Three more FTZs were added in 2015 in Guangdong, Tianjin and Fujian and more were announced in 2017. The most recent expansion of China’s FTZ pilot program was announced in April 2018 when the southern island province Hainan as a whole became a testing ground.
Contact reporter Han Wei (firstname.lastname@example.org)
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