On October 10, 2019, a series of global investment promotion conferences are held in Shijiazhuang, capital city of north China’s Hebei Province, for the Langfang Airport Economic Zone of Beijing Daxing International Airport and the Daxing Airport section of China (Hebei) pilot free trade zone.

When commenting about the reason for choosing Nanjing as the location for the base, Stephen Toope, vice chancellor of the University of Cambridge, said that the economic vitality there and the convenience brought by the establishment of the free trade zone are the cornerstones for promoting innovation. Nanjing’s research and innovation environment and talent services are very attractive, he added.

Since the establishment of the first pilot free trade zone (FTZ) in Shanghai at the end of September 2013, as of August 2019, China had established a total of 18 pilot FTZs.

Attracting Foreign Investors

Since its unveiling on August 30, the three sections of the Jiangsu FTZ have all received much foreign investment. At the opening ceremony of the Suzhou section, the first batch of 32 enterprises signed contracts for new projects.

“The Suzhou section is a new opportunity both for the Suzhou Industrial Park and for Bosch,” said Andreas, general manager of Bosch Automotive Products (Suzhou) Co., Ltd., a subsidiary of Germany’s Bosch.

In the Lianyungang section, Jiangsu Dongda Food Co., Ltd., a joint venture, indicated what attracted it to the Lian-yungang section of the Jiangsu FTZ was the development prospects.

The same story has been repeated in five other new FTZs. In the Guangxi FTZ, about 10 foreign enterprises including the Deutsche Post DHL Group and Praxair of the U.S. entered the FTZ on the opening day. In the Hebei FTZ, a large number of companies from France, Russia, Germany, South Korea, Japan, India, and the U.S. have come to find out how they can invest or develop international business there. In the Shandong FTZ, many hi-tech companies from overseas have settled there, including a China-South Korea science and innovation incubation cooperation base, and a robot research institute co-built with Nobel Prize laureates. In the Yunnan FTZ, an amount of over US $110 million of foreign investment was introduced. In the Heilongjiang FTZ, a Sino-Russian timber processing and trading center is presently under construction, and a trade hall was set up in Harbin by a Korean trade and investment revitalization commune, and the list goes on and on.

Wang Shouwen, vice minister of commerce, pointed out that some of the reasons why foreign investors, including European and American ones, are very interested in investing in China’s pilot FTZs are their advantages of being open, and having superior institutions and business environment.

In the first half of 2019, the 12 pilot FTZs attracted nearly RMB 70 billion of foreign investment, accounting for about 14 percent of the national total. The actual use of foreign capital increased by more than 20 percent year on year, nearly 13 percentage points higher than the national growth rate of seven percent. “We believe that the six newly established pilot FTZs will also become hot spots for foreign investment,” said Wang.

Differentiated Development

Trade experts have pointed out that since September 2013, China has set up 12 pilot FTZs, and added the Lingang Special Area to the Shanghai Pilot FTZ to gradually improve the overall layout. The purpose of establishing more pilot FTZs in Shandong and six other provinces and autonomous regions last year is to conduct comparative and complementary experiments in a wider range of areas and at more levels, so as to stimulate the internal impetus for high-quality development and better serve the overall strategic layout of opening-up.

The FTZs in Shandong, Jiangsu, and Hebei have the advantage of being located along the coast. Shandong aims to speed up the transition of old driving forces to new ones, to promote the high-quality development of the marine economy, to deepen China-Japan-ROK regional economic cooperation, and promote the development of a new highland for opening-up.

By deepening industrial restructuring and implementing the innovation-driven development strategy, Jiangsu will take the lead in building an open economy and invigorating the real economy through innovation and industrial transformation.

Hebei will focus on serving the coordinated development of the Beijing-Tianjin-Hebei region, building the Xiongan New Area with high quality, and developing high-end, hi-tech industries. It will also become an important hub of international trade and logistics, a new industrialization base, a global innovation highland, and a pilot zone for promoting China’s further opening-up.

The Guangxi, Yunnan, and Heilongjiang FTZs are located along the national border. Guangxi will build an important gateway linking the 21st Century Maritime Silk Road and the Silk Road Economic Belt through deepening its cooperation with the ASEAN countries, promoting the construction of new international land and sea trade routes and exploring ways for the development and opening-up of border areas. Through cooperation with Vietnam, Laos, Myanmar, and other neighboring countries, Yunnan will build an important node that connects South Asia and Southeast Asia, and promote China’s opening-up toward these two regions. As for Heilongjiang, it will become a central hub for regional cooperation with Russia and Northeast Asia by promoting the all-round revitalization of Northeast China, deepening industrial restructuring, building a transportation and logistics hub facing Russia and Northeast Asia, and enhancing the openness of border areas.

“The six new pilot FTZs aim to further expand opening-up in the coastal and border areas, and will accelerate the replication and promotion of the pilot FTZs’ experience, extend their reach to more Belt and Road partner countries, and promote domestic reform and opening-up. During this process, the six pilot FTZs need to attach more importance to deepening economic and trade cooperation with neighboring countries and regions based on their respective geographical advantages. They need to take advantage of this as an opportunity to realize new heights of opening-up and build stronger growth drivers, and thus be able to reach more countries,” said Zhang Jianping, deputy director of the academic committee of Chinese Academy of International Trade and Economic Cooperation.

An aerial photo taken on August 27, 2019 shows the spectacular Tesla Shanghai factory under construction in Lingang New Area of the Shanghai Free Trade Zone.

More Investment in the Future

Policies like preferential tax and special supervision at the customs have helped to facilitate the import, manufacturing, and export of goods, creating an internationally competitive business environment in pilot FTZs.

The six FTZs established in August 2019 focus on opening wider to the outside world, while promoting institutional innovation and improving the business environment. Wang pointed out that on the basis of fully learning from the successful experience and focusing on investment, trade, finance, in-process and after-process supervision, and other aspects, the Ministry of Commerce has set tasks for a systematic and integrated pilot reform for each new FTZ.

“The Yantai section of the Shandong FTZ has confirmed 16 items for institutional innovation, rolled out measures to optimize government services so as to realize cross-border approval of business licenses for investors from Japan and South Korea. By far, the minimum time needed for investors from Japan or South Korea to obtain a license is five days, all done without leaving their countries,” said Tan Ying, an official of the Yantai Economic & Technological Development Area.

According to Zhang Hua, director of Jinan Municipal Bureau of Financial Supervision and Administration, Jinan, capital of Shandong Province, has launched a pilot plan for financial reforms, including 20 measures that cover four aspects: attracting foreign financial institutions; promoting two-way cross-border investment and financing; improving financial services; and establishing and improving the financial risk prevention and control system.

To be specific, the measures include: encouraging local corporate banks to cooperate with equity-investment institutions and provide enterprises with “equity + debt” investment and financing services; and carrying out reforms and innovations in fund management to expand financing channels for enterprises.

In the Service Center of the Kunming section of the Yunnan FTZ, an efficient review and approval service system has been put in place. Meanwhile, preferential policies such as tax, rent allowances, and a complete warehousing and logistics system have all greatly reduced operating costs.

Jiang Yanmin, head of operations of Sanofi China R&D Center, a leading global pharmaceutical and health company, received the first business license at the opening ceremony of Jiangsu FTZ Suzhou Section. “It took less than 24 hours for us to get the business license. The FTZ speed is amazing!”

Jiang said Sanofi plans to invest €20 million annually in the new research institute in Suzhou over the next five years and conduct cutting-edge biomedical research in the fields of oncology, immunity, and metabolism. With the opening of the Suzhou section of the FTZ, the company expects greater convenience in terms of application of medical research achievements, connection with the international market, and the import and export logistics of biological products. She is confident of the company’s future development in Suzhou.

In Zhang Jianping’s opinion, the next step that should be taken is to speed up the implementation of the new Foreign Investment Law and make it transparent. In addition to this, pilot FTZs need to make new breakthroughs to facilitate trade and investment, especially in financial management and customs supervision. They need to continue to improve their business environment to play an exemplary role. “China’s pilot FTZs are a new highland and platform for reform and opening-up. It is also an important institutional measure for helping build new growth and innovation drivers for China’s opening-up.”  

QIU HAIFENG is a reporter with People’s Daily overseas edition.