Free trade zones (FTZs) becoming more and more prominent
October 22, 2019 Category Foreign trade, Weekly
From the first batch of made-in-China Tesla cars to the first foreign-owned comprehensive hospital, the Shanghai free trade zone (FTZ) is advancing toward a higher level of openness since its establishment six years ago. The Lingang area, the newly launched section of the Shanghai FTZ, is “Tesla’s dream city” in the eyes of Tao Lin, Tesla’s global Vice President. Since the world-leading electric carmaker acquired a plot of land in Lingang last October, it has constructed a plant, installed equipment and started testing, heading toward the final stage of production and delivery. The main body of the Tesla Shanghai gigafactory has been completed, and key workshops are ready for production. The first batch of test vehicles has rolled off assembly lines, and the China-made Tesla Model 3 will be delivered by the end of the year. Tao said that Tesla, through localized procurement, will facilitate the development of the auto parts supply chain and logistics in Lingang. For example, Saint-Gobain invested CNY20 million in a high-end automotive glass assembly base in Lingang, and the first piece of automotive glass is expected to be produced this month.
The Lingang administrative committee announced 56 favorable measures to bolster the development of emerging industries and build an open industrial system that will be competitive worldwide. Fifteen biomedicine companies signed agreements with the Lingang life science and technology park to set up projects with a total investment of more than CNY7 billion. The first phase of the Lingang life science and technology park, covering 280,000 square meters, started construction at the end of 2017 and is scheduled to be put into use by the end of this year.
On September 26, Shanghai Artemed Hospital, the first foreign-owned general hospital in the Shanghai FTZ, announced its official opening, showing the comprehensive opening up of the FTZ from the manufacturing industry to the services industry. The first phase of the hospital opened with 200 beds, specializing in orthopedics and tumors.
In addition to its latest batch of FTZs in provinces such as Shandong and Jiangsu, China’s 12 FTZs established in the previous rounds attracted foreign investment of nearly CNY70 billion between January and June this year, accounting for 14% of the country’s total, data from the Ministry of Commerce (MOFCOM) show. China’s first free trade zone was set up in Shanghai in 2013. The country then added more FTZs four times, including in the coastal provinces of Fujian and Guangdong and the inland provinces of Shaanxi and Sichuan.
One of the biggest achievements of the FTZs is to make foreign investment in China easier by adopting a negative list that spells out which sectors are closed or restricted for foreign investment, said Tang Wenhong, Director General of the Foreign Investment Administration (FIA) of the Ministry of Commerce (MOFCOM). Eager to attract more capital, technologies and talent from various global markets, China released two revised negative lists for foreign investment on June 30, which came into effect on July 30, allowing foreign businesses to enjoy preferential policies in more industries and sectors. The nationwide negative list was slashed from 48 items to 40, and the one for FTZs was cut from 45 to 37.
“The FTZ model has become a new driving force amid the slowing economy and rising protectionism. It will diversify China’s developing ability,” said Feng Yaoxiang, Director of the Investment Promotion Division at the China Council for the Promotion of International Trade (CCPIT).
Since their establishment, different FTZs have different priorities. For instance, the China (Guangdong) Pilot Free Trade Zone has improved trade facilitation and cemented ties with Hong Kong and Macao; and the China (Hainan) Pilot Free Trade Zone has been tasked by the central government to establish a basic free trade port system by 2025 and become a world-class free trade port by 2035.
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