The establishment of pilot free trade zones represents China's major move to adopt a more proactive strategy of opening up in line with the new trend of global economic development. The State Council has so far approved pilot free trade zones (FTZs) for Shanghai, Tianjin, Guangdong, Fujian, Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan and Shaanxi.
Officially launched on 1 April 2017, the Chongqing Pilot Free Trade Zone (FTZ) forms part of the third batch of government-endorsed pilot FTZs. Covering an area of 119.98 sq km, the zone consists of three sub-zones: The Liangjiang Area (66.29 sq km inclusive of the Chongqing Lianglu Cuntan Bonded Port Area (8.37 sq km)), the Xiyong Area (22.81 sq km inclusive of the Chongqing Xiyong Comprehensive Bonded Zone (8.8 sq km) and the Chongqing Railroad Bonded Logistics Centre (Type B) (0.15 sq km)) and the Guoyuangang Area (30.88 sq km).
In accordance with the Overall Plan for the China (Chongqing) Pilot FTZ, as approved by the State Council, over the next three to five years, the Chongqing FTZ will seek to establish a high-level, high-quality free trade park in line with accepted investment and trade facilitation practices, while also nurturing a cluster of high-end industries and maintaining efficient and convenient oversight. It will also look to deliver a high standard of financial services, ensure the maintenance of a well-regulated and legally-compliant operating environment and provide a model of good practice for the wider business community. It will also oversee the construction of an international logistics hub, a port and an inland open-economic highland designed to meet the goals outlined under the terms of both theBelt and Road Initiative and the Yangtze River Economic Belt development programme. Overall, it will also look to advance the opening up of the western region’s gateway cities, while bringing to full fruition the priorities identified as part of the wider western region development initiative.
Within the FTZ, a special customs supervision area will look to offer enhanced trade facilitation through the launch of bonded processing, logistics and services. Other areas within the site will look to develop open investment strategies, refine the existing systems for investment management, provide enhanced supervisory regimes and promote innovative financial practices, while actively cultivating high-end manufacturing and the professional services sector.
Foreign Investment Management
Under the terms of the Special Administrative Measures (Negative List) Relating to Foreign Investment Access, as promulgated by the State Council, a series of special management measures covering those businesses and industries deemed unsuitable for foreign investment are to be implemented across the 11 FTZs currently operating on the mainland. In the case of any sectors not specified on the negative list, the current practice of advance approval for foreign-invested projects, as well as the established process of examining and approving any foreign-invested enterprise’s contracts and articles of association, is to be replaced by filing requirements more in line with the system specified for domestic investors.
Any special administrative measures in place relating to national security, public order, public culture, financial prudence, government procurement, subsidies, special procedures and tax-related matters remain in force even if such sectors are not specified on the negative list. Furthermore, in the case of sectors related to national security, any foreign investment is also subject to scrutiny under the terms of the Tentative Measures for the National Security Review of Foreign Investment in Free Trade Zones.
Positioning of Sub-zones
This site will have a primary focus on nurturing a cluster of high-end industries, with a particular emphasis on high-end equipment, core electronic parts, cloud computing and biomedicine. In terms of services, it will look to develop specialties in the fields of headquarter management, e-commerce, exhibitions, warehousing, distribution, professional services, financing/leasing, and R&D/design. These will form part of wider moves to open up and foster innovation within the financial industry, accelerate a range of innovation-driven development strategies and promote the clustering of a number of factors necessary to optimise the local production chain, including logistics, technology, human resources and the provision of capital.
Establishing a demonstration site showcasing the transformation and upgrade options for trade processing will be the primary focus here. As an additional priority, work will also be undertaken to develop a number of manufacturing sectors, particularly with regard to electronic information and smart equipment. In terms of the services sector, the focus will be on bonded logistics, transshipment/distribution and the optimization of the processing trade.
The focus here will be on establishing a multi-modal logistics transshipment centre, as well as on developing a range of related services, including international transshipment, consolidation and distribution. Consideration will also be given to the development of innovative manufacturing facilities.