A New Port of Call

China mulls its first free trade port areas in Shanghai By Wang Jun

When President Xi Jinping, also General Secretary of the Communist Party of China (CPC) Central Committee, outlined China’s development blueprint for the next decades in his report to the 19th CPC National Congress on October 18, he laid out a series of ambitious plans. Among them is a pledge to “grant more powers to pilot free trade zones (FTZs) to conduct reform and explore the building of free trade ports.”

The move has “in effect raised the standard for developing the test field for reform and opening up and shown us a new direction with higher standards for ushering in a more comprehensive and in-depth landscape for opening up,” said Gao Feng, spokesman for the Ministry of Commerce (MOFCOM).

“Under the unified leadership of the CPC Central Committee and the State Council, MOFCOM, together with the provinces, municipalities and departments involved, is studying issues concerning the building of free trade ports on the basis of high-standard, high-quality pilot free trade zones,” Gao told a press conference in Beijing on October 26.

Plans are being formulated for free trade port areas in Shanghai, China’s largest business hub and home to the country’s first pilot free trade zone, according to Gao. In addition, the pilot free trade zone in Zhejiang Province, one of the country’s most economically developed coastal regions, has set the goal of transforming itself into a pilot free trade port up to international standards to facilitate trade in bulk commodities, such as oil products.

Chen Bo, Executive Director of the Free Trade Zone Research Center of Huazhong University of Science and Technology in Wuhan, Hubei Province, said, “The evolution of free trade zones to free trade ports is of great significance to reform and opening up. The aim of free trade ports is to open China wider.”

Shanghai reportedly has submitted a tentative program for piloting the establishment of free trade port areas, and is discussing the scheme with MOFCOM. An implementation plan is expected to be completed within the next few months, Chen said.

Shanghai FTZ version 3.0

The concept of free trade port was first proposed in the State Council’s plan for deepening the opening up of the China (Shanghai) Pilot FTZ, issued on March 31, which was the third document of its kind for the Shanghai FTZ.

According to the plan, free trade port areas will be set up in the Yangshan bonded port area and Shanghai Pudong Airport’s comprehensive bonded area. Industry insiders consider the plan’s major highlight to be the two new areas.

“The Port of Shanghai serves the Yangtze River Delta and the entire country, therefore improving its efficiency will serve both the regional and the national economy. This is why the government decides to set up free trade port areas,” said Sun Yuanqing, Deputy Director of the FTZ Institute of Shanghai University of Finance and Economics. “Combining free trade areas and port operations will be conducive to developing transit and high-end processing trade and promoting innovation.”

Chen said the State Council’s plan requires the highest international standards of opening up to be adopted in Shanghai’s planned free trade port areas. This means it is intended to compete with top ports worldwide which have the best management professionals and resources, such as Hong Kong of China and Singapore. “From this point of view, the free trade port areas in Shanghai will be more open than the current free trade zone,” he said.

Currently, Hong Kong, Singapore and Dubai are known as the most robust free trade ports in the world. Researchers believe they can provide valuable references for China’s free trade ports.