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With China’s commerce minister Zhong Shan offering verbal support to building the country’s free-trade ports this week, Beijing’s renewed efforts to pick up the free-trade mantle could contain some substance this time.
To accelerate the opening-up of the Chinese economy, Zhong said greater freedom should be given to the local governments in running the free-trade zones, which would eventually be developed into free-trade ports. His statement was published on Tuesday by the Ministry of Commerce.
Zhong is the latest senior government official to throw his weight behind the ambitious plan to turn some of the mainland’s developed cities into Hong Kong-like international metropolises, following Vice-Premier Wang Yang’s calls to build the mainland’s own free-trade ports in November.
There will be some policy breakthroughs in this round of efforts to build free marketplaces on par with Hong Kong and Singapore, according to Chen Bo, a professor at Huazhong University of Science and Technology and an adviser to local governments including Shanghai on policymaking. “For Shanghai, it definitely aims at the highest international standards in developing a free-trade port,” said Chen.
Relaxed visa rules to facilitate foreign businesspeople’s stay in the mainland, lower taxes for businesses in line with international practices, expanded geographical size and freer cross-border capital flows were among the factors in the plan, the professor added.
Shanghai has spearheaded the move among its provincial-level counterparts to submit its plan to turn the existing free-trade zone (FTZ) into a free-trade port. Several local officials said a detailed action plan was likely be approved by the central government soon.
Shanghai unveiled its ambition to build its free-trade port early last year, after four years of running the city’s 120 sq km FTZ with little success. The limited geographical size of the FTZ and the snail pace in financial deregulation dented foreign companies’ interest in doing business and making investment in the once much-hyped zone.
For Shanghai, it definitely aims at the highest international standards in developing a free-trade port. A typical free-trade port allows goods and capital to flow in and out unhindered, without import duties being charged. Except for businesses listed on a “negative list”, all foreign investments can be made in the zone without going through the standard government approval procedures.
“The commerce minister’s statement is at least a positive message to businesses around the world that China wants to attract and retain them,” said Frank Feng, the chief executive of a visa service firm. “Businesspeople are highly expecting some substantial liberalisations.”
The mainland has 11 FTZs across the nation, including those in the more prosperous Guangdong, Zhejiang and Fujian provinces. Shanghai, which established the country’s first FTZ in late 2013, is expected to be the first region to receive a nod from the central leadership to build a free-trade port.
China also needs to take measures to offset the impact from US President Donald Trump’s tax cut plan that aims to retain and attract foreign investment on the latter’s home turf.