SCIO briefing on China's commerce development in 2015

Reporter (the media outlet unspecified):

I have a question on pilot free trade zones. So far, they have been established in Shanghai, Tianjin, Guangdong and Fujian. They have absorbed a large amount of foreign funds, but they are criticized for not being open enough. They might be doing well in the trade in goods, but some policies on the flow of funds are not fully implemented. What's your response to this? Thank you.

Gao Hucheng:

Thank you for your attention to this issue, which has also attracted the attention of many others. I think all journalists here are interested in the development of China's free trade zones. Establishing free trade zones is an important action taken by the Communist Party of China (CPC) Central Committee and the State Council with the aim of finding new approaches and accumulating new experiences in deepening reform and opening up. China first carried out the reform and opening-up policies in 1978. The valuable experience we have gained over the past 30-plus years is to be cautious in advancement. We are making tests in the pilot zones to see if we can open wider and reform deeper. The experiences we accumulate later will be promoted nationwide. The major task is to introduce innovations in mechanisms, streamline administration and delegate power, so as to remove any barriers that might prevent the market acting as the decisive force in allocating resources. Regarding the specific implementation, to be frank, the China (Shanghai) Pilot Free Trade Zone has been in operation for a short time. We have expanded the zone and built three new ones in Guangdong, Tianjin and Fujian.

The State Council issued plans for the four zones last April. Various departments under the State Council undertook 366 pilot tasks, and more than 80 percent of them have been implemented. You said that some of the pilot tasks haven't been carried out yet. There are several reasons. First, pilot tasks will be trialed for two or three years in the free trade zones, so reform measures that are highly comprehensive and cover a wide range of departments should be developed carefully and carried out steadily.

Second, some policies have been formulated, and the departments concerned are working on the implementation rules. Most such policies concern the service sector, while in the manufacturing industry, almost all policies have been implemented.

Third, some reform measures involve more than one department, and all those concerned are discussing ways of cooperation and working hard to carry out the policies jointly. The Commerce Ministry is the leading department of the joint conference on pilot free trade zones attended by various ministerial departments under the State Council. We will continue to do all we can to coordinate various departments and local governments, so as to accelerate fulfillment of the pilot tasks.  Generally speaking, the free trade zones are developing smoothly. Notable successes have been achieved in the innovation of mechanisms, streamlining administration and delegating power.

In the field of investment, pre-establishment national treatment and the negative list have been implemented for foreign investments. These measures have helped make the free trade zones popular investment spots for foreign funds. Take the Shanghai Free Trade Zone as an example. The total number of foreign-funded companies has grown by 50 percent, and the average value of foreign-funded projects has exceeded US$10 million. This is significant growth. In the other three free trade zones, no foreign-funded project so far involved less than US$6 million. In free trade zones, foreign companies in industries outside the negative list can complete all establishment procedures in three working days. In contrast, in areas outside the free trade zones, the examination and approval process takes more than ten days, or even months. Such convenience is common in free trade zones.

As for trade facilitation, free trade zones are taking bigger steps. They are the first in China to establish a "single-window" in border ports. This practice has enhanced customs clearance efficiency by 40 percent, and it is being further improved.

Regarding supervision during and after the establishment of projects, the free trade zones have taken many measures, such as establishing a supervisory platform based on big data and categorizing companies according to their credit records. All of these measures lead the way in China.

In 2014, one year after the establishment of Shanghai Free Trade Zone, 34 pilot practices from it were introduced nationwide. So far, we have accumulated other useful experiences and will promote them throughout the country. Besides, some practices are being evaluated by a third party. I hope they can be promoted elsewhere soon, so as to bring the benefits of reform to more people. Thank you.