China’s establishment of a free trade port, the enlightenment of European experience

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The opening ceremony of the 19th National Congress of the Communist Party of China was held in the Great Hall of the People in Beijing. During the report, Xi Jinping, the general secretary of the CPC Central Committee, said in the report that the opening of China’s door will not be closed and will only widen. In the context of the current wave of anti-globalization sweeping across the world’s major economies, Xi Jinping’s statement is undoubtedly a powerful shot for global trade and investment liberalization.

It is worth noting that in the report, Xi Jinping said that the free trade pilot zone will be given greater reform autonomy and explore the construction of a free trade port. Innovate foreign investment methods, promote international capacity cooperation, form a global network of trade, investment, financing, production and service, and accelerate the cultivation of new advantages in international economic cooperation and competition.

More advanced than the Free Trade Zone and the Free Trade Zone

In fact, in the “Reform and Deepening China (Shanghai) Pilot Free Trade Zone Reform and Opening Program” issued by the State Council in April this year (hereinafter referred to as the “Full Reform Plan”), the concept of establishing a free trade port area has already been mentioned. The “Full Reform Plan” proposes to establish a free trade port area within the special customs supervision areas such as Yangshan Bonded Port Area and Shanghai Pudong Airport Comprehensive Bonded Area.

When it comes to free trade, many people’s first reaction may be the free trade pilot zone and the bonded zone.

“People’s Daily Overseas Edition” reported that the China Free Trade Zone refers to a multi-functional economic zone with the main purpose of preferential taxation and special customs supervision policies and the main purpose of trade liberalization and facilitation. . Since the establishment of the first free trade zone in China in September 2013, the Shanghai Free Trade Zone has undergone three rounds of approval. At present, it has formed a “wild geese” pattern of 11 “1+3+7” total of 11 free trade pilot zones.

When it comes to the bonded area, also known as the bonded warehouse area, the level is lower than the comprehensive bonded area. It is an economic area established by the State Council of China and implemented by the Customs to implement special supervision. The Free Trade Zone enjoys the policy of “free of charge, tax exemption and bonded” and implements the “domestic and foreign customs” operation mode. It is one of the economic zones with the highest degree of openness to the outside world, the most convenient operation mechanism and the most favorable policies.

Compared with the above two forms of free trade, the free trade port must be more “higher” in terms of level, degree of liberalization and internationalization!

According to Beijing China Business News, Chen Bo, a professor at Huazhong University of Science and Technology and executive director of the Free Trade Zone Research Center, said that “the free trade port area is one level higher than the free trade test area, similar to Hong Kong and Singapore, with a higher degree of freedom. Chen Bo said that the earliest bonded areas had certain functions of free trade, but they were limited, and they were limited to the free trade of intermediate industrial products, that is, the so-called export processing industry, rather than the free trade of general commodities. There are now more than 3,000 free trade zones in the world, and most of them are consistent with our bonded areas. Our country’s free trade pilot zone is more like a free economic zone. In such a region, trade liberalization is the forerunner to explore the open market economic system.

“The free trade port area is one level higher than the Pilot Free Trade Zone. It is similar to Hong Kong and Singapore. It has a higher degree of freedom. Such places generally have physical fences, where complete liberalization, including legal regulation liberalization, is also There can be problems that traditional bonded areas cannot do, such as futures trading and offshore trade.” Chen Bo believes that the free trade port area is more open to the outside world. In the future, foreign investors invest in the port area, set up enterprises, cross-border capital flows, etc. There is great freedom, including exploring the establishment of offshore accounts, etc. For countries with capital projects that are not yet open, it is conducive to international capital to establish global and regional corporate headquarters in our free trade port area, especially with international trade. Related companies are more willing to put their headquarters in the free trade port area.

From the prosperity to the past, the past and present of the European Freeport

When it comes to building a free trade port, European developed countries should be regarded as the forerunners. However, in recent years, the form of Freeport has declined in Europe.

In Hamburg Freeport, for example, the Freeport of Hamburg was established on October 15, 1888. In its more than a century of development, Hamburg Freeport, which accounts for only about one-fifth of the Hamburg port area, has been in the world. One of the larger economic free zones. On January 1, 2013, Hamburg Freeport officially ended its history for more than 100 years.

The reason for the cancellation of the Freeport in Hamburg was generally attributed to the impact of European integration on the advantages of Freeport after World War II.

Wolfgang Hurtienn, the head of the Hamburg Port Authority (HPA), once said in the “21st Century Business Herald” in Guangzhou that when the EU established a customs union, it stipulated that the EU would enter the EU from all regions of the EU. Goods (ie goods that flow inside the EU) must pay customs duties when entering the EU port area, which means that the only advantage of the Hamburg Free Port duty-free is gone.

According to Shanghai’s “Oriental Morning Post” report, the EU’s internal tariffs, tariffs fell sharply, from 30% in 1988 to 3% in 2006, reducing the role of tariff reduction. At the same time, as the EU unified market expanded to 25 member states, non-EU goods fell by a third in the total volume of the Port of Hamburg.

Under the unified tariff policy, the tax-free advantage of the Freeport of Hamburg is no longer obvious, and this situation also appears in other free ports in Europe. The highly integrated economy has prompted the free port that once prevailed in Europe to gradually decline.

Abandonment in Europe is not “outdated”

Some people may ask, Freeport is gradually abandoned in Europe, why should China continue to explore?

In fact, China’s free trade port is very different from the European Freeport. First of all, the two are fundamentally two completely different concepts. The free trade port proposed by China is based on the free trade pilot zone. As Hurtina said, the Shanghai Free Trade Zone has better policies for some investors. For example, foreign companies are now easier to set up branches in the Shanghai Free Trade Zone, and there are some preferential policies on tariffs and taxes. However, in the Freeport of Hamburg, these policy support are not available. The Freeport of Hamburg has only one policy support for tariffs on departure.

Second, China has a different environment than European countries. Asia has not yet reached a single market that is as highly integrated as the EU, let alone a customs union. Although the disappearance of Freeport in Europe has become a general trend, the enthusiasm of Asian countries for free trade zones has just begun.

In the past four years, the China Free Trade Zone has achieved remarkable results. According to China News Service, as of now, there are 48,000 new registered enterprises in the Shanghai Pilot Free Trade Zone, the number of registered enterprises per month is 5 times before the listing, and the activity of newly registered enterprises is over 80%. Among the newly established enterprises, 8878 new foreign-invested enterprises have been established, and the proportion has increased from 5% at the initial stage to nearly 20% at present. Real foreign investment is 16.7 billion US dollars, equivalent to twice the total of 20 years before the listing. With the construction of a free trade port in the future, China’s opening up to the outside world will generate more powerful momentum.

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