China: China Announces New Free Trade Zones In Six Provinces

Last Updated: 4 October 2019
Article by Dorcas Wong

On August 26, China announced it will be expanding pilot free trade zones (FTZ) to six new provinces across the country. These are Jiangsu, Shandong, Hebei, Heilongjiang, Guanxi, and Yunnan.

The move, which will raise the total number of China's FTZs from 12 to 18 – aligns with the government's ongoing reforms to open up the economy.

The expansion plans aim to deepen China's trade and economic ties with neighboring countries while also bolstering the local economy in underdeveloped provinces.

FTZs to ease regional trade and investment

The new FTZs are all located along the coastal or border regions and will serve as major gateways for trade and investment flows with Russia, Japan, South Korea, and Vietnam.

The FTZ expansion comes just weeks after another escalation in the US-China trade war.

In mid-August, both China and the US announced substantial tariff hikes – the US announcing tariffs on US$300 billion worth of goods to be implemented in two tranches and China reciprocating with additional tariffs on US$75 billion worth of goods.

It appears that China is looking to strengthen its underdeveloped provincial economies and secure stronger regional links, such as through the Belt and Road Initiative (BRI), to offset the impact of current trade tensions.

"The [new pilot FTZs] will not only help to optimize the strategic distribution of pilot FTZs, but also serve major national strategies such as the Belt and Road Initiative," Chinese Vice-Minister of Commerce Wang Shouwen explained at the Press Conference announcing the new FTZs.

Alongside this, Shanghai's Pilot FTZ recently extended its boundaries to the Lingang area – almost doubling in size and launched a slew of tax incentives and policy support for businesses in this area.

Together the new FTZs signal China's decision to become more proactive in combating the slowdown caused by the trade war, through the acceleration of opening up reforms and fostering relationships with alternative trade partners.

FTZs play an important role in modernizing China's business landscape, serve to stimulate domestic and foreign trade, and attract foreign direct investment. They offer preferential policies for the import, handling, manufacturing, and exporting of goods, as well as through tax incentives, free flow and exchange of capital, and fast-tracked procedures for investment.

Making use of geographical advantages

The Ministry of Commerce and the Ministry of Resource will be responsible for marking out the new pilot free trade zones, before submitting then to the State Council for filing.

This year will see the addition of FTZs in:

  • Yunnan, the landlocked province that borders Vietnam, Laos, and Myanmar;
  • Guangxi, the southern autonomous region that borders Vietnam;
  • Heilongjiang, the northeastern province that borders Russia; and
  • Shandong, Jiangsu and Hebei, the coastal provinces that sit across the ocean from South Korea and Japan.

"The Overall Plan for Six New Free Trade Zones"(Guofa [2019] No.16), in conjunction with the "Reply on the Approval of the Establishment of Six Free Trade Zones" (National Letter [2019] No. 72), provide details on the scope, layout, and measures of each FTZ, emphasizing each province' strengths and needs when introducing the new reforms.

Specifically, "the FTZ will tap into respective geographical advantages to deepen trade and economic cooperation with neighboring countries and regions," said Chinese Vice-Minister of Commerce Wang Shouwen.

Many of the FTZ plans share a common theme of heightening trade facilitation, improving investment promotion and protection, optimizing trade structure, and easing the business environment.

However, "[the plans] include distinctive and differentiated pilot reforms tasks in keeping with the strategic positioning and local features of the pilot FTZs," the Chinese Vice-Minister of Commerce Wang Shouwen explains.

Shandong Pilot FTZ

Shandong Pilot FTZ covers three areas, including parts of Jinan, Qingdao, and Yantai, amounting to 119.98 square kilometers.

This FTZ will focus on accelerating the development of marine industries, development of industrial finance, artificial intelligence as well as the medical and health care industry as well as capitalizing on its strategic location to increase international trade cooperation between China, Japan, and South Korea.

Jiangsu Pilot FTZ

The Jiangsu Pilot FTZ covers three areas in Nanjing, Suzhou, and Lianyungang, adding up to 119.97 square kilometers.

One of the primary goals of this zone is to facilitate the cooperation with provinces and cities in the Yangtze River Economic Belt and the Yangtze River Delta to promote regional integrated development.

The pilot FTZ will include specific measures to improve the level of overseas investment cooperation, strengthen financial support for the real economy, and support innovation and development of the manufacturing industry.

Heilongjiang Pilot FTZ

The Heilongjiang Pilot FTZ covers parts of Harbin, Heihe, and Suifenhe, coming to 119.85 square kilometers and will be a key driver of revitalization of northeast China.

According to Beijing, this zone will support emerging industries, such as high-end equipment, smart manufacturing and new energy, as well as offering incentives for commercialization of technological achievements.

It also will help boost the economies along China's rust belt – enhancing cooperation between China and Russia as well as the East Asian region.

Hebei Pilot FTZ

The Hebei Pilot Free Trade Zone covers areas in Xiong'an, Zhengding, Caofeidian, and the Daxing Airport, which comes to 119.97 square kilometers altogether.

This FTZ will promote the coordinated development of Beijing, Tianjin and Hebei (otherwise known as the Jing-Jin-Ji region). It will do so by spearheading the high-quality development of Xiongan New Area through financial innovation, digital technologies and platforms, and accelerating the technological achievements in bio-medicine and health sectors Beijing and Tianjin.

Yunnan Pilot FTZ

The Yunnan Pilot FTZ covers parts of Kunming, Honghe, and Dehong, which is 119.8 square kilometers.

Yunnan's FTZ is located at an important economic corridor interconnecting the BRI and the Yangtze River Economic Belt.

The FTZ will thus act as an opening-up frontier linking China, South Asian, and Southeast Asian countries and build a world-class healthy lifestyle destination by introducing high-end medical resources from home and abroad.

Guangxi Pilot FTZ

The Guangxi Pilot FTZ covers three areas in Nanning, Qinzhou, Chongzuo area, adding to about 119.99 square kilometers.

The FTZs aim to function as an international land and sea trade corridor connecting China with other ASEAN countries, such as Vietnam, Laos, Thailand, and the Philippines.

As an important gateway linking the land and sea routes of the BRI (also known as the 21st Century Maritime Silk Road and the Silk Road Economic Belt), these zones will be key gateways for tourism, cross-border finance, and logistics.

Role of FTZs within China's reform plans

The announcement of the six new pilot FTZs come at a crucial time.

Already US tariffs on Chinese goods have caused manytech factories to relocate to Southeast Asia and have forced China to look for more reliable alternate trade partners, such as Russia for energy and agricultural goods.

The new pilot zones will open new channels of trade and investment with China's larger neighborhood, hopefully taking away some of the heat from its deteriorating relations with the US.

In any case, the desired effect will be twofold. Attracting more foreign business to China and supporting the development of domestic economic clusters like the Jing-Jin-Ji, Yangtze River Economic Belt, and the Northeast region.

Still, many remain skeptical of the role of FTZs in China – as the proportion of foreign investment drops despite added incentives. According to media sources, Dalian, one of the three pilot FTZs situated in Liaoning province, experienced a significant 17.6 percent drop in foreign direct investment in 2018.

Similarly, Shanghai's FTZ has seen a decline in each of the most recent last three years, falling 3.5 percent to US$6.77 billion in 2018.

Nevertheless, put altogether – FTZs in key locations, the latest changes to the FI National Negative List, and the new Foreign Investment Law – demonstrate China's commitment to building a more open economy following international best practices.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions