This year marks the fifth anniversary of China (Shanghai) Pilot Free Trade Zone, the country’s first free trade experimental zone. Since its establishment, the Shanghai FTZ has been exploring new paths and accumulating experience on how to deepen reform and opening-up.
The Shanghai FTZ has extensively explored areas such as investment, trade and finance, and gathered valuable experiences in them. As a result, about 95 percent of the foreign investment projects in the FTZ have been launched just after being registered, rather than after approval.
By the end of 2016, the Shanghai FTZ had launched a pilot reform of separating business licenses issued by the industry and commerce departments and those certificates issued by other departments.
To make customs clearance more efficient, the Shanghai FTZ deepened customs clearance reform, thereby reducing the time of entry and exit in bonded areas by 78.5 percent and 31.7 percent, respectively, compared with the national average. This year, it has implemented electronics Equipment Interchange Receipt, which could reduce the enterprises’ cost by up to 400 million yuan ($57.50 million).
As an important part of the financial infrastructure reform, the Shanghai FTZ has gradually established a free trade account system, which provides enterprises a cheaper overseas financing channel. Some financial innovations such as the Shanghai Gold Exchange’s international board are based on the free trade account, too, and till June this year, 56 financial institutions had opened 72,000 free trade accounts－equivalent to 1.25 trillion yuan in domestic and foreign financing.
As such, the Shanghai FTZ has become a growth pole of China’s new round economic development.
Statistics show that since being established, the Shanghai FTZ has registered about 57,000 enterprises, among which more than 10,000 are newly established foreign investment companies, attracting $110.2 billion in contractual foreign investment and $25 billion in actual foreign investment.
Also, despite occupying one-fiftieth of Shanghai’s land area, the FTZ accounts for one-fourth of its GDP and two-fifths of its overall trade volume.
Other free trade experimental zones, too, have successfully attracted investment. For example, by the end of August this year, 4,729 Hong Kong enterprises had registered in Qianhai and Shekou Area of Shenzhen, with their registered capital adding up to 424.2 billion yuan and the actual investment use being $1.89 billion.
By the end of the first half of this year, Hong Kong-invested enterprises in Qianhai and Shekou Area of Shenzhen had achieved 17.7 billion yuan in value added and paid 5.95 billion yuan in taxes. These enterprises also made 6.68 billion yuan in fixed asset investment.
As for Hengqin New Area of Zhuhai, it has attracted 2,434 Hong Kong and Macao enterprises over the past nearly three years. In Chengdu Hi-tech Industrial Development Zone, more than 90,000 enterprises had registered until April 30－and it had attracted over 30 billion yuan in investment by May 8.
And Hubei Pilot Free Trade Zone, established in April 2017, had attracted 133 foreign investors by the end of the first half of 2018.
As China accelerates the pace of its opening-up, the number of and scales of its free trade zones are expanding. Its reform, too, is deepening.
In the keynote speech at the first China International Import Expo in Shanghai last month, President Xi Jinping announced that China will further deepen reform and innovations in its pilot free trade zones, including the Shanghai FTZ, allowing them to play an experimental and important role in reform and opening-up.
Besides, the Shanghai FTZ’s new round of construction will further promote institutional innovation, reform and opening-up, help build a world-class business environment in the country, improve global resource distribution capacity and explore new paths for China’s further opening-up.
We hope the Shanghai FTZ succeeds in further deepening reform and opening-up.
The author is a researcher at the Chinese Academy of International Trade and Economic Cooperation.