Giving greater autonomy in reforming the Pilot Free Trade Zone, China is exploring a free trade port

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Wang Yang, member of the Central Political Bureau Standing Committee and vice premier of the State Council, published his signed article “Promoting a New Pattern of Full Opening.” The full text of more than 6400 words, from the opening up of the situation, connotation and initiatives several aspects of its detailed explanation, a great amount of information. Among these, the most widely discussed issue is “exploring the construction of a free trade port.”

If you pay attention, you will know that this is actually an echo of the 19 major reports. On the 18th of October 18th, Xi Jinping explicitly pointed out that it is necessary to promote the formation of a new pattern of full liberalization, “give more freedom to reform the free trade pilot zone and explore the establishment of a free trade port.”

Free trade area, we often listen, but free trade port is what? Why is it so important in the pattern of opening to the outside world?

concept
Strictly speaking, since it is still in the exploratory stage, there is no clear definition of the FTZ for the academic community.

But let’s take a look at the Free Trade Area that everyone is familiar with.

In September 2013, China established the first Pilot Free Trade Zone, Shanghai Free Trade Zone. Since then, one after another has been developed to 11 free trade pilot areas, including Tianjin, Guangdong, Fujian Free Trade Zone and so on. Within the scope of these free trade zones, one or more customs supervised zones with bonded functions are often included.

The purpose of setting up a special customs control zone for the Customs undoubtedly is to ease the tariff burden on enterprises and promote international trade. In our country, bonded areas, bonded areas, bonded logistics centers and so on all belong to various forms of special customs supervision zones.

for example. If a U.S. company wants to export goods to China, B will have to pay certain tariffs to the Chinese government if it is at an ordinary port. According to the tariff reduction schedule between the two countries under the WTO, And the formalities can be quite complicated.

However, if the Customs Special Supervision Zone such as the Comprehensive Bonded Zone, B companies may enjoy the corresponding bonded treatment. In other words, the display and processing of these areas need not be subject to tariffs, and tariffs must be paid only when they leave these areas and enter the Mainland.

So, compared with the above concept, free trade port may be what difference?

Wang Yang in the article made it a qualitative, “Freeport is located in a country (region) within the customs, the goods and funds to enter and leave freedom, the vast majority of goods exempt from tariffs in specific areas, is currently the world’s highest level of special economy Ribbon “.

The last sentence is the key. To put it plainly, it is necessary to establish a high standard of opening up area to the highest international standard on the basis of the existing free trade zone and the free zones it contains, and to become a hub of global trade. Based on this, the free trade port is often regarded as an “upgraded version” of the FTZ.

How to upgrade? Hong Kong, Singapore, we are all familiar with the free trade port, to become learning, competition and beyond the object.

Benchmarking

In fact, not only Hong Kong and Singapore, including Dubai in the Middle East, Hamburg in Germany and Rotterdam in the Netherlands, have developed free trade ports that are in line with local characteristics.

For example, the biggest advantage of the port of Rotterdam is superior service capabilities. As we all know, with the acceleration of the integration of the EU, the advantages of tariff reduction have been weakened within the EU. However, the superb harbor service capabilities of the Port of Rotterdam brought massive trade to it. Its outstanding advantage is that it has established a public information platform and realized the standardization of EDI (Electronic Data Interchange). In addition, a network of three-dimensional transport was established in the port of Rotterdam on hardware, resulting in an integrated operation of storage, transportation and sales.

In the same place of Asia, Singapore and Hong Kong, which rank top in the world’s container ports, may be more useful for the construction of China’s free trade port.

As a country that bases itself on the free trade port, Singapore has its main advantage in technological innovation. For example, as early as 1989, it launched the National Electronic Data Interchange System Trading Network. How powerful is this network? Including more than 35 relevant departments such as customs, taxation and security. As a result, the original documents that need to be submitted to multiple departments are only required to be submitted once. The clearance time required from 2 to 7 days is theoretically Can be shortened to 1 minute.

Hong Kong’s experience can be summed up in two words – freedom. First of all, the entire Hong Kong administrative region is a free trade port. No tariffs are allowed on all goods except the four tariff lines (alcohol, tobacco and cigarettes, hydrocarbon oil and methanol). Second, the registration cost of setting up any kind of company in Hong Kong is very low. Foreign investors can hold 100% of the shares, and more importantly, all the funds can be accessed.

In fact, Hong Kong has been voted “the freest economy in the world” by the American Heritage Foundation for 23 consecutive years and has a very high reference value for building a free trade port in our country.

China has already submitted proposals for the construction of a free trade port, which are Shanghai and Ningbo. However, there is a certain gap between Hong Kong and Singapore in terms of investment and construction environment.

opportunity

So, on this basis, China’s free trade port construction to go out a what kind of way?

The opinion of the leaders in Shanghai Municipality is that the goal of building a free trade port is not limited to the trade itself. Its initial concept is to trade-led industries and “leave a huge added value brought by tremendous trade volume.”

How to deal with huge trade? What is the huge value added?

Cui Fan, a professor at the School of International Economics and Trade of the University of International Business and Foreign Affairs and guest professor at the Globalization Think Tank (CCG), believes that the core lies in entrepot trade and offshore trade. In the current stage, the domestic construction of a free trade port should first of all be vigorously to attract entrepot trade and to concentrate more on commodity logistics and supply chain enterprises. “However, the development of local trade and entrepot trade are not the end-offshore trade. Offshore finance will be Free trade port policy is the ultimate direction of development. ”

What is offshore trade? Generally speaking, it is divided into two parts: “business change hands” and “goods and services related to offshore transactions.”

For example, a company in Hong Kong needs to resell fabrics from the Mainland to a US brand-maker. In the process, the fabric did not move in and out of Hong Kong and the goods were shipped directly from the Mainland to the United States. However, in terms of property rights, A company belonging to the trade process. This process is called “changing business activities”; it is also a company, but this time I am not directly involved in buying and selling, but to help buyers and sellers find sources, promote markets, negotiate prices, arrange shipping, etc., which is equivalent to an intermediary, This is the “goods and services related to offshore transactions.”

These can be called off-shore trade, the former by the International Monetary Fund into the trade statistics of goods, the latter into the service trade statistics. Compared to the traditional entrepot trade, it has a lower physical cost and less demanding geographical location. With information sources, businesses around the world can do it. Undoubtedly can bring a huge amount of trade and funding.

In Hong Kong, in 2015, the scale of offshore trade in Hong Kong has reached 4.33 trillion Hong Kong dollars, accounting for 55% of its annual trade volume.

A big total, the role of added value will be highlighted.

“When we can attract businesses from all over the world to do business here, the value of the goods and information flow in our hands will be immeasurable.” To Cui Fan, the ultimate significance of offshore trade lies in the information it brings And data flow, which includes product information, order information, logistics information, business information and so on. The advantages of the rapid development of e-commerce enterprises in China are particularly conducive to the development of offshore trade.

“China’s opening to the outside world has entered a new era. Simply exporting and opening up the domestic market can no longer meet the needs. What China needs to do now is to make full use of global resources and to allocate higher levels of value from the point of view of the global value chain. The exploration of building a free trade port will help our country to take a more advantageous position in the international division of labor. ”

Bridgehead

From this perspective, the FTZ undoubtedly has a significant pilotage.

On the one hand, from the domestic reality, China’s dependence on foreign trade has always been higher than most other economies. In 2006, China’s import and export volume accounted for 64% of the GDP of that year. In general, the economies of large economies will have less dependence on foreign trade, but their share will still be as high as 33% by 2016. Foreign trade remains one of the most important engines of China’s economy.

On the other hand, since China joined the WTO in 2001, there have been only a few remaining open bonuses in our country. In addition, over the past few decades, China has always been in the low-end of its value chain in world trade activities, and these are problems that must be solved urgently.

These are undoubtedly calling for a world-class and open trade platform.

In the view of more experts, the free trade port is an important node for our opening up to the outside world and reflects the policy of continuing to be open in our country.

General Secretary Xi Jinping also said at the 19th NPC that “it is necessary to push forward the formation of a new pattern of full opening up,” stressing that “opening up will bring progress and closing will inevitably lag behind.” “The door to opening to the outside world will not be closed but will only grow wider and wider” . The new era of reform and opening up, also need to engage in “upgraded version.”

Today’s world economic landscape has undergone major changes. The WTO Doha Round of Stagnation has stagnated. The “Belt and Road” initiative initiated or participated by China, the AIIB, the Silk Road Fund and the regional comprehensive economic partnership have all along become increasingly important sources of support for the new round of economic globalization.
Xi Jinping said at a recent summit of APEC Business Leaders: “In the next 15 years, China will import 24 trillion U.S. dollars of goods and absorb 2 trillion U.S. dollars in overseas direct investment and its total foreign investment will reach 20,000 yuan Hundreds of millions of dollars. ”

It can be seen that as a newly emerging power with growth potential, the world’s second largest economy, China has become a heavyweight bearer in promoting economic globalization.

Under such circumstances, if China wants to achieve the transformation from a big manufacturing country for trade to a capital-industrial power, it must lead a bridgehead deeply embedded in the global financial and trade division of value chain.
Free trade port, perhaps it is history given that “bridgehead.”

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