In the first seven months of 2020, more than 3,300 new foreign-owned
enterprises were registered in China's 18 free trade zones (FTZs)
attracting more than 90 billion yuan ($13.53 billion) in actual foreign
investment, with the export-import volume reaching 2.7 trillion yuan.
These FTZs account for only 0.4 percent of China's land area but attract
16.8 percent of the country's total foreign investment, with their
foreign trade volume being 13.5 percent of the country's total. The release of the overall plan for the Beijing, Hunan and Anhui free
trade zones on Sept 21 shows the Chinese government's resolve to
explore independent, higher-level opening-up through the FTZs. During
the 13th Five-Year Plan (2016-20) period, the number of FTZs in China
increased from four to 21. The FTZs have more autonomous powers to
deepen reform and thus promote higher-level opening-up and innovation,
and enhance China's global competitiveness. The successful experiences of the 18 operational FTZs in terms of
reform, opening-up and innovation have been implemented nationwide. In
the seven years since the first FTZ was established, 260 successful
experiences of the FTZs have been replicated elsewhere to promote
liberalization, facilitate trade and investment, encourage the financial
sector to serve the real economy, transform government functions and
inject vitality into the market. The FTZs have created an environment
conducive to sharing the reform dividends, demonstrating the benefits of
deepening reform and opening-up. From 2016 to 2020, the FTZs' operations have formed a new pattern,
creating an ideal condition for exploring new channels of investment,
trade, finance, supervision and human resources. In fact, the FTZs
promote institutional innovation, and their successful experiences can
be replicated elsewhere to further deepen reform, and therefore build a
solid foundation for higher-level opening-up. Besides, the FTZs have attracted huge amounts of foreign investment
and created new jobs, which have helped stabilize foreign investment and
foreign trade. As part of the process to develop economic hinterlands,
the construction of the FTZs in several areas have yielded the dividends
of reform and promoted high-quality economic development. The FTZs also explore new, feasible opening-up measures that are in
accordance with international principles, in order to promote the
transformation of the economic development model, and advance
higher-level opening-up and innovation. The FTZs will also promote the
"dual circulation" development pattern, which is centered on the
domestic economy ("internal circulation") and aims to integrate the
domestic economy with the global economy ("external circulation") with
the aim of enhancing China's global competitiveness and cooperation. With China facing severe external challenges, including
anti-globalization sentiments in some economies and the novel
coronavirus pandemic, the FTZs should act as a bridge between the
domestic and global economies based on their functions and advantages. Through deepening domestic reform, China can expedite its industrial
upgrading and transform the economic development model, and thus
increase its industrial advantages. And by further opening up the
domestic economy to the outside world, China could make full use of the
international division of labor to optimize resource distribution, more
expeditiously develop advanced technology and promote innovation. As such, the FTZs need to explore both the foreign and domestic
markets, as well as resources to consolidate the links between China and
the rest of the world, and promote the "dual circulation" development
pattern. The free trade zones should also focus on making economic
operations more efficient, so as to further deepen reform and promote
higher-level opening-up in the next stage-which would release a new
round of higher-level opening-up dividends. Moreover, the FTZs can help widen China's participation in
globalization and the international division of labor so that it enjoys a
bigger say in the international community and plays a bigger role in
global coordination and rule-making. As the FTZs will step into a new development stage during the 14th
Five-Year Plan (2021-25) period, they will explore new frontiers and
accumulate new experiences in terms of reform and opening-up. And
exploration and innovation will allow them to better promote
high-quality development and help China build a higher-level open
economy. The author is a researcher at the Chinese Academy of
International Trade and Economic Cooperation. The views don't
necessarily represent those of China Daily.
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