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China launches three more free trade zones

Updated: Apr 22,2015 10:20 AM     Xinhua

Huang Xingguo, mayor of north China’s Tianjin Municipality, inaugurates the China (Tianjin) Pilot Free Trade Zone in Tianjin, China, April 21, 2015. Three new free trade zones (FTZ) began official operation on April 21, 2015 as China seeks to draw more international commerce. [Photo/Xinhua]

BEIJING — Three new free trade zones (FTZ) began official operation on April 21 as China seeks to draw more international commerce.

The new zones were established 18 months after the first FTZ was unveiled in the financial hub Shanghai, which was designed to help streamline the overloaded administrative approval system and encourage innovation and internationalization.

Photo taken on Nov. 7, 2014 shows the Yujiapu Railway Station and its surrounding landscape at Binhai New Area of the China (Tianjin) Pilot Free Trade Zone in north China’s Tianjin Municipality. Three new free trade zones (FTZ) began official operation on April 21, 2015 as China seeks to draw more international commerce.[Photo/Xinhua]

Officials expect the new FTZs in Tianjin, Guangdong and Fujian will boost economic reform, promote trade and facilitate investment in new areas as the world’s second largest economy moves away from an unsustainable export-dependent model.

Provincial-level officials attended the launching ceremony at the three zones on April 21, when dozens of business licenses were ceremonially granted to registered enterprises.

Some businesses have already experienced the increased efficiency of working in the new zones.

Photo taken on March 30, 2015 shows a scene of the Dongjiang dock in Port of Tianjin, part of the China (Tianjin) Pilot Free Trade Zone in north China’s Tianjin Municipality.[Photo/Xinhua]

Liu Qiya, the chief financial official with Tuwei Tongli Electrical Technology based in Xiamen, an open coastal city of Fujian, said his company was granted an operational license for the zone just three days after the application was submitted. The same procedure in other parts of the province could take weeks.

Antonio Fossanti, CEO of the Italian RDS, said the reason his retail company chose to operate in the Tianjin zone is the one-stop solution of problems concerning policy, customs, trade and marketing.

Photo taken on Jan. 1, 2015 shows the Port of Tianjin in north China’s Tianjin Municipality. [Photo/Xinhua]

According to a detailed plan released on April 20, the new zones will be based on the Shanghai FTZ but catered to utilize their geographical locations.

By its first anniversary, the Shanghai zone had seen nearly 12,000 registered enterprises lured by a better trade and investment environment.

The Tianjin zone aims to better integrate the northern municipality with Beijing and Hebei province. It will prioritize modern service industries, including shipping, culture and equipment manufacturing.

Photo taken on Nov. 7, 2014 shows the landscape of Yujiapu Finance District at Binhai New Area of the China (Tianjin) Pilot Free Trade Zone in north China’s Tianjin Municipality. [Photo/Xinhua]

The Guangdong zone will deepen economic cooperation between the mainland and neighboring special administrative regions Hong Kong and Macao. It will have three bases in the cities of Guangzhou, Shenzhen and Zhuhai.

The Fujian zone will focus on developing economic cooperation between the mainland and Taiwan. It will cover three areas in Xiamen, Fuzhou and Pingtan, a new industrial park targeting investment from Taiwan.

Qianhai and Shekou Area of Shenzhen of the China (Guangdong) Pilot Free Trade Zone is seen in Shenzhen, south China’s Guangdong province, Feb. 28, 2015.[Photo/Xinhua]

The Shanghai zone, which has been more than quadrupled in size since it was established, will continue to strive for “the greatest openness” to facilitate investment and trade with currency convertibility and a sound legal environment. It will also further open its service and manufacturing industries.

All zones must adhere to the negative list, which details 122 prohibited or restricted areas for foreign investment, ranging from Internet news services, production of radio and television programs to nonferrous metal mining. This number has been reduced from 139.

Foreign investors will be subject to the same rules and regulations for new investment as domestic firms.

A scene of Chimelong Water Park located in the Hengqin Area of the China (Guangdong) Pilot Free Trade Zone is seen in Zhuhai, south China’s Guangdong province, March 17, 2015.[Photo/Xinhua]

Experts believe that these fresh zones are strategically important for the “belt and road” initiative, which aims to better connect Asia, Europe and Africa, as a way to boost investment and consumption.

Shekou Area of the China (Guangdong) Pilot Free Trade Zone is seen in Shenzhen, south China’s Guangdong province, Feb. 26, 2015. [Photo/Xinhua]

Shao Yu, Shanghai-based chief economist of the Orient Securities Co.,Ltd., said the four FTZs will be crucial “supporting points” for the belt and road initiative.

“More opening-up moves are needed in regions such as southwestern Yunnan and Tibet for the new strategic layout,” he said.

Qianhai and Shekou Area of the China (Guangdong) Pilot Free Trade Zone is seen in Shenzhen, south China’s Guangdong province, Feb. 28, 2015. [Photo/Xinhua]

Wang Shouwen, assistant minister of commerce, said the new zones will not just copy the Shanghai zone but also break fresh ground in areas such as investment administration, trade regulation and financial systems.

The replication of successful reform measures is a common strategy in the reform and opening-up drive. The Shenzhen Special Economic Zone, founded in 1980, has been rolled out along the entire east coast over the past three decades.

An office building in Qianhai and Shekou Area of the China (Guangdong) Pilot Free Trade Zone is seen in Shenzhen, south China’s Guangdong province, Feb. 28, 2015.[Photo/Xinhua]

That zone allowed foreign investment to develop the manufacturing industry, a driving force behind the economic boom of previous decades.

FTZ fever has caught the attention of officials across the country, with many pushing for their regions to be included in the next batch of FTZs.

Businessmen watch the planning map at Fuzhou Area of China (Fujian) Pilot Free Trade Zone in Fuzhou, capital of southeast China’s Fujian province, April 21, 2015.[Photo/Xinhua]

However, observers warn that the central government must ensure that the FTZs are used to pioneer reform measures, and that their policies are correctly implemented.

Foreign business groups have said that the Shanghai zone brought improvements but they expected “more tangible benefits” of financial reforms, such as full convertibility of the yuan.

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