China's Political Bureau of the Communist Party of China (CPC) Central Committee has approved the establishment of three more free trade zones (FTZs) in Guangdong, Tianjin and Fujian, as well as improvements to the Shanghai FTZ.
The latter, launched in September 2013, is a pilot project for reforms that range from administration, investment, finance through services, Xinhua news agency reported.
State media have said the Guangdong FTZ aims to speed economic integration with neighboring Hong Kong. The Fujian zone is focused on Taiwan, while the Tianjin FTZ is part of a push to better integrate the city with nearby Beijing and Hebei province.
Improved biz and commerce climate
In a statement, the Central Committee said that the FTZs are part of a new, more open economic system, exploring new models for regional economic cooperation, and establishing a law-based climate for business and commerce, the statement said, adding that the Shanghai FTZ has made "positive progress" over more than a year, generating a model that can be replicated elsewhere.
Disputed Shanghai results
However, some Western media report that the promised range of financial reforms, including full convertibility of the yuan currency and free interest rates, remain unfulfilled, while an annual survey of more than 370 members of the American Chamber of Commerce in Shanghai released this month found that almost three-quarters of the respondents believed the China (Shanghai) Pilot Free Trade Zone offered no tangible benefits for their business. Around half said they hadn’t noticed any change.
The Xinhua report noted that "more than 14,000 new companies have been set up ever since the Shanghai FTZ was established, outnumbering the total number in the past 23 years before the establishment of the FTZ. Among these companies, 2,114 of them are overseas companies, up 10.4 times year-on-year, taking up 43 percent of the total number of overseas companies in Shanghai.
Logistics companies benefit from Shanghai’s FTZ
Foreign investment has accelerated at the same time. A total 160 overseas investment projects completed so far, with the total amount of foreign investment from Chinese companies reaching 3.8 billion yuan (U.S.$610 million). More than 60 new policies have been introduced by the local Customs, inspection and quarantine, as well as maritime affairs departments. Companies in the FTZ have seen their logistics cost reduced by 10 percent so far.
Chinese officials have said that the Shanghai free trade zone has simplified foreign-exchange procedures and made it easier for companies operating in the zone to borrow funds offshore. It has also allowed Microsoft and Sony to offer video-game consoles in China for the first time in more than a decade.
Officials maintain that more liberalization lies ahead as China moves gradually toward an easing of its foreign exchange control regime, which limits currency conversions.
Nol van Fenema
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