How far is China’s opening up to the free trade port from the FTZ?

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The opening up will bring progress and the closure will inevitably lag behind. China’s opening door will not be closed but will only grow bigger and bigger. The 19th National Congress of the Communist Party of China delivered its message to the world that China unswervingly opened its door to the world and further promoted the economic globalization of the free trade port area.

It is not just an unshakable determination, but also an immediate move.

To “give more freedom to trade pilot zone reform autonomy and explore the building of a free trade port” just gone, the free trade area in each country have opened a new exploration of opening up, focus on the free trade port.

This is what kind of open new exploration? Why does China need such a new exploration of openness? Free Trade Port to the Chinese economy, what kind of impact and change? Pilot Free Trade Area around the establishment of free trade in Hong Kong where the possibility and path? … China Free Trade Zone reported that from today on launch of “new exploration of openness – focus on free trade port” series of reports to explore the answers to these questions.

On October 18, 2017, President Xi Jinping explicitly stated in the 19th Congress report: “Give more freedom to reform the free trade pilot zone and explore a free trade port.” So as to further develop the 11 pilot free trade areas across the country Put forward higher requirements, pointed out a new direction.

On October 26, when a spokesman for the ministry of commerce spiked at the peak of free trade ports, he disclosed: “At present, we are going to work with Shanghai Municipality and relevant departments to study and formulate relevant construction plans and are closely linked to the core tasks of system innovation in the pilot free trade zone. Great efforts to explore the construction of free trade port. ”

How to understand free trade port? On November 10, Wang Yang, vice premier of the State Council, in his article in the People’s Daily pointed out that a free trade port is a special area located outside the border of a country (region) where goods and funds personnel are free and most of the goods are exempt from customs duties. The highest level of special economic function area.
It is reported that at present, Shanghai, Zhejiang, Fujian, Guangdong and many other places are in the process of starting or planning to explore the free trade port. From the progress point of view, Shanghai is expected to walk in the forefront of the country. According to the “Comprehensively Deepening the Reform and Opening-up Plan of the China (Shanghai) Pilot Free Trade Zone” announced in March this year, Shanghai will set up a “Free Trade Port Area” within the special customs control zones of Yangshan Bonded Port Area and Shanghai Pudong Airport Bonded Area, .

Yu Miaojie, vice president of National Development Research Institute of Peking University, said at a time when he said that free trade ports will be within the borders of a country or region. But the administrative supervision point of view, it is outside the customs control points.
“Building a free trade port is an important measure for building an open economic system in our country under a new era.”

The territory of customs

Zimao Jun learned from relevant sources that at present, Shanghai has submitted the proposal of building a free trade port to the relevant state ministries for advice and will implement an intensive management system based on the authorization of the State to explore ways and means of implementing financial, foreign exchange, Investment and exit management system, establish and improve risk prevention and control system.

According to relevant media reports, Xie Qiuhui, director of Pujiang Administration of Exit Inspection and Quarantine of Shanghai, issued a document on 20 October saying that the salient difference between the world’s most advanced free trade port and the existing free trade zone in China lies in the fact that the former’s import and export procedures are extremely simple and even large Some free. To this end, Shanghai Free Trade Zone will explore the realization of first-line unconditional access, registration filing, exemption zone exemption.

Chen Bo, a professor at Huazhong University of Science and Technology and executive director of the Free Trade Zone Research Center, said that the goal of building a free trade port is not limited to the trade itself. Rather, it is to trade-driven industries and leave a huge added value brought by tremendous trade volume.

“With this as the goal, offshore trade and offshore finance will be the development direction of the free trade port policy.”

“The development of offshore trade is the core of the circulation of goods and the starting point for the construction of the entire free trade port. The core of offshore trade lies in the regulation of customs in and out of the territory, and the storage of goods is exempt from tax in the free trade port area and there is no need to declare customs clearance.”

Yu Miaojie also believes that to understand the free trade port, we must seize the key words “inside and outside the territory”.
“Today’s construction of a free trade port has taken one step further than the construction of a free trade pilot area, although both of them are highly independent domestic and overseas areas that are” open in the first place “and” second-line safe and efficient management. “However, The pilot area is more open and the policy is more flexible. ”

Zhang Jianping, deputy director of the academic committee of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, told Zima Jun that trade facilitation of a free trade port will be much higher than that of a free trade zone.

“Free trade ports belong to the Customs and Excise Department and do not involve tariffs on the circulation of goods. Goods enter Hong Kong and do not need customs clearance, which is the so-called mode of operation of offshore trade, which will greatly reduce the time and capital costs of enterprises.”

Many experts who interviewed Zimao Jun said that the free trade zone in Shanghai will become the priority area for pilot free trade ports. The mode of operation within Shanghai Yangshan Free Trade Port Zone and Shanghai Pudong Airport Bonded Zone will be free Trade port construction prototype and direction.

Financial Innovation

Bai Ming, deputy director of the Institute of International Market Research under the Ministry of Commerce, told Zima Jun that the difference between free trade port and free trade zone lies mainly in allowing offshore trade and opening up the high-end service industry on the basis of offshore trade. Develop related businesses such as offshore finance.

According to FTZZ, the existing 11 FTZs have undergone significant changes in the commercial system with notable improvements in the management of the negative list system, the facilitation of enterprise registration, and the speed of custody. However, they are not perfect in terms of capital flow and financial support. However, free trade ports have seen major changes in financial services and currency flows.

Take Shanghai Free Trade Zone as an example, Zheng Yang, director of Shanghai Municipal Finance Office,

For a free trade port, finance can play an important role. Such as facilitating convenient capital flows in free trade ports; optimizing cross-border capital services in local and foreign currencies; enhancing the innovation of cross-border RMB products; and allowing financial institutions to innovate offshore financing methods to support free trade ports.

Insiders said that these characteristics of the free trade port will bring a lot of room for innovation in the market players and will also attract the attention of the capital market.

Compared with the free trade zone, the free trade port will be more flexible in terms of goods circulation, capital circulation and financial services. In the meantime, “letting go of the second line” will become the mainstream mode of free trade port supervision.

Bai Ming said that the free trade port marking the world’s highest standards of Singapore and Hong Kong, China are two important reference standards. However, as a free trade port, these two regions have realized the transfer and weakening of many government administrative functions.

“In this respect, we may differ from it.” It is a basic condition for letting go of second-tier regulation and at least filing for a record. Regulation can not be completely relaxed but the degree of freedom granted by the government may be further relaxed. ”

Yu Miao Jie also believes that within the controllable range, free trade port need to further improve financial convenience.

“First, we will continue to pilot the opening of relevant capital policies in FTAs ​​to enhance the convenience of foreign exchange settlement and settlement. Second, we must actively construct a complete financial leasing system that will provide adequate financial support for trading activities in the port area.”

Gradient transfer

In Baiming’s opinion, the free trade port will make a breakthrough in two aspects compared to the free trade zone.
First, at the geographical level, more emphasis will be placed on making good use of the port resources. Second, at a higher level of economic and opening-up, the liberalization of trade and investment will further ease the authority and stimulate the economic development in the periphery and will play a role in radiation and demonstration effect.

However, some scholars also point out that the free trade port is not only a “patent” of the coastal port city, but also the inland city can still develop a free trade port.

Earlier, during the convening of the 19 National Congress, Xi’an Municipal Party Committee Secretary Wang Yongkang once said:
Free Trade Port is an upgraded version of the FTZ and a booster for the Belt and Road initiative. This will bring new opportunities for the development and opening up of the inland areas and one of the ways to solve the imbalance in the development of the central and western regions.

Jiang Fuyi, secretary of Sichuan Luzhou Municipal Committee, said that Luzhou is an important area for the free trade zone in Sichuan. Luzhou should take advantage of its ports and strive to build a free trade port.

At present, China has formed 11 pilot free trade areas throughout the eastern, central and western regions and cities. How should the free trade port be laid out? Chen Bo believes that the construction of a free trade port should be the first to be piloted by the coastal areas, and this concept still looks ahead for many inland areas.

Chen Bo said that at present the benchmarking target of free trade port is very clear, that is, Hong Kong and Singapore. These free trade ports are basically seaports.

“Although there are very good visions elsewhere, judging from its economic structure and level of opening up to the outside world, it is still a long way to go for marking the international advanced or first-class open standards.”
Zhang Jianping argues that in theory, a free trade port means more than just a harbor, but also a river port, an airport port and a dry port. At this level, a free trade port is not a “patent” of a coastal port city.

“From a practical point of view, free trade port flexibility, high degree of freedom, the need for a mature management methods and risk control mechanisms at this level, Shanghai, Zhejiang, Guangdong is relatively perfect.”
Zhang Jianping said

“Therefore, I think it will be a dynamic process that the free trade port will first pilot in areas where the development is relatively mature and the regulatory system is relatively complete, and gradually shift to the gradient of the cities in the central and western regions.”

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