"Windows to the World": China develops FTZ mechanism
Tashkent, Uzbekistan (UzDaily.com) -- The mechanism of the Chinese free trade zones (FTZ), which has already become the most effective tool for ensuring economic interaction of the PRC with foreign partners, celebrates seven years on 29 September. Chinese FTZs offer foreign capital tax preferences, simplified customs clearance and investment procedures, and expanded access to specific sectors.
The first Chinese FTZ was opened on 29 September 2013 in Shanghai. After that, Shanghai immediately became the leader in the ranking of the competitiveness of cities in China, surpassing Hong Kong, which occupied the first line for 11 years. The experience of the Shanghai FTZ was so successful that the authorities decided to implement it throughout the country. In seven years, 18 free trade zones have appeared in China. They have proven their relevance and viability even during the period of such serious trials as the COVID-19 pandemic. So, for 7 months of 2020, 3300 new enterprises with the participation of foreign capital were opened in them. The volume of attracted investments from abroad amounted to 90 billion yuan (more than US$13 billion), foreign trade - 2.7 trillion yuan (US$397 billion). “The area of all FTZs is less than 0.4 percent of China’s area. At the same time, they account for 16.8 percent of foreign investments attracted by the PRC and 13.5 percent of foreign trade,” said Wang Shouwen, Deputy Minister of Commerce of the PRC.
The official stressed that in the midst of the COVID-19 pandemic, FTZs played an important role in stabilizing overseas investment and international trade. A striking example is the experience of the most interesting FTZ for Russians in the Heilongjiang province in the northeast of China. Established just over a year ago, in August 2019, the Heilongjiang Free Trade Area is performing well, even though more than half of the time since its inception has passed in a pandemic.
As Vladimir Oshchepkov, Consul General of Russia in Harbin, said in an interview with the information project “Russia - China: Events and Comments,” regular international communication, when it is quite difficult to negotiate, start joint projects, invite foreign partners. "
According to the diplomat, “over the past year, a huge organizational work has been done: governing committees have been established, dozens of legislative and regulatory acts have been prepared and adopted, allowing residents to receive benefits and advantages of the zone”. This made it possible to achieve the first significant results. Thus, in the FTZ cluster in the border city of Heihe, the emphasis is on the processing and storage of Russian energy resources and environmentally friendly products, the development of logistics and e-commerce. It has already registered about 800 enterprises with a total registered capital of over 5 billion yuan (US$730 million). The construction of 24 large projects focused on cooperation with Russia has begun.
“Logistics companies received a good impetus for development: the chains of goods delivery are being improved, warehouse capacities are increasing. Business formalities have been greatly simplified. For example, Russian citizens can register online as an individual entrepreneur in Heihe from the territory of Russia,” Oshchepkov said.
Another border cluster in Suifenhe received additional incentives for processing Russian raw materials, cross-border trade and logistics services, including those focused on multimodal transport. In particular, the volume of goods sent through this border city in the European direction increased by 40 percent, and by almost 15 percent to Asian countries and other regions of China via the Russian Vladivostok.
“As for the FTZ cluster in Harbin, we believe it has good prospects. Here the Russian-Chinese industrial park "Wanke" is being created, centers for trade in agricultural products with our country, the provision of cross-border financial services to entrepreneurs of our countries, as well as a joint e-commerce park. Much influence is paid to the development of information technology, new materials, high-tech equipment, biomedicine, finance. We believe that Harbin has the necessary infrastructure, qualified personnel and managerial experience for this,” Oshchepkov said.
He added that today "within the framework of the Heilongjiang FTZ, discussions are continuing with the Russian side on the creation of cross-border production chains, joint processing of energy resources, agricultural products, joint projects in the field of medical services and tourism."
In September, just a week before the seventh birthday of the Chinese FTZ mechanism, China announced the creation of three more free trade zones: in Beijing, Anhui and Hunan provinces. After their opening, the number of free trade zones in China will reach 21.
The decision to create new FTZs has actually debunked the fears of foreign observers that China will begin to “withdraw into itself” with the introduction of a new “double circulation” policy, which was announced this summer in the height of the COVID-19 pandemic.
It presupposes a “double circuit” of the Chinese economic system: internal and external circulation, with the emphasis on “internal circulation”, that is, on relying on one’s own forces and internal markets for further economic development. This has given rise to speculation in the West that China may go astray by expanding its openness to the outside world. Chinese economists explain: the essence of the new strategy is to secure the national economy from the growing factors of instability in foreign markets; there is no talk of cooling interaction with foreign partners.
Vice Chairman of the China Center for International Trade Exchanges Wei Jianguo is confident that China’s policy towards new free trade zones only points to further opening to the outside world, despite the increased attention to the national economy and the COVID-19 pandemic. "China is making efforts to develop huge domestic market opportunities, but is still committed to economic globalization, and FTZs will play a key role in promoting it and allocating resources efficiently," the expert says.