FTZs poised to sharpen growth edge

Zones al­low in­land re­gions to di­ver­sify man­u­fac­tur­ing and geo­graphic ad­van­tages

China Daily (Hong Kong) - - BUSINESS - By ZHONG NAN and LIU WEIFENG

The de­vel­op­ment of free trade zones will cre­ate a com­pet­i­tive edge for China to tap sup­ply-side re­form and the Belt and Road Ini­tia­tive, as well as al­low in­land re­gions to di­ver­sify their man­u­fac­tur­ing and geo­graph­i­cal ad­van­tages, se­nior com­merce of­fi­cials said on Mon­day.

Com­merce Min­is­ter Gao Hucheng said China has in­tro­duced 19 prac­ti­cal mea­sures on the in­vest­ment en­vi­ron­ment, ad­min­is­tra­tive re­form and poli­cies to as­sist in­no­va­tion gained from the op­er­a­tion of its four FTZs.

Ap­proved by the cen­tral gov­ern­ment in Au­gust, the coun­try will open another seven FTZs — the third batch, in­clud­ing Liaon­ing and Zhe­jiang prov­inces, to cre­ate new mar­ket growth points for both trade and in­vest­ment.

FTZs of­fer greater ac­cess for global com­pa­nies to ex­pand in China and for Chi­nese com­pa­nies to move their cap­i­tal to over­seas mar­kets in di­verse ser­vices and fi­nan­cial op­er­a­tions such as e-com­merce, man­u­fac­tur­ing and lo­gis­tics.

“Based on statis­tics be­tween Jan­uary and Novem­ber, China is ex­pected to gain $126 bil­lion in for­eign di­rect in­vest­ment from the non-fi­nan­cial sec­tor in 2016,” Gao said at the min­istry’s an­nual meet­ing in Bei­jing.

The third batch of FTZs are ex­pected to be of­fi­cially launched as early as Jan­uary, ac­cord­ing to the Eco­nomic In­for­ma­tion Daily.

Tang Wen­hong, di­rec­tor­gen­eral of the min­istry’s depart­ment of for­eign in­vest­ment ad­min­is­tra­tion, said the na­tion will fur­ther sim­plify and mod­ify four for­eign in­vest­ment laws and en­cour­age for­eign com­pa­nies to in­vest in the coun­try’s cen­tral and west­ern re­gions next year.

“China’s mod­ern ser­vice busi­nesses, en­vi­ron­men­tal pro­tec­tion, com­mu­ni­ca­tion and in­for­ma­tion ser­vices, as well as high-tech in­dus­tries will of­fer more mar­ket ac­cess to for­eign in­vest­ment in 2017,” said Tang.

“For­eign com­pa­nies have dis­cov­ered that mar­ket

China (Shang­hai) Pi­lot Free Trade Zone was in­au­gu­rated.

Septem­ber 2013 March 2014 A

plan for three FTZs in Tian­jin, Guang­dong and Fu­jian, and the ex­pan­sion of the Shang­hai FTZ was ap­proved by the cen­tral gov­ern­ment.

Au­gust 2016

Seven new FTZs were ap­proved by cen­tral gov­ern­ment, in Zhe­jiang, Liaon­ing, He­nan, Hubei, Sichuan and Shaanxi prov­inces, and Chongqing mu­nic­i­pal­ity.

de­mand in China is chang­ing as both con­sumers and com­pa­nies want to pur­chase more high value-added prod­ucts and there is a surg­ing de­mand for ser­vices,” said Li Gang, vice-pres­i­dent of the Bei­jing-based Chi­nese Acad­emy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion, the min­istry’s think tank.

Li said be­cause the ser­vice in­fra­struc­ture fa­cil­i­ties of China’s cen­tral and west­ern re­gions are not as ad­vanced as those in east­ern re­gions, for­eign com­pa­nies are keen to en­ter mar­kets which have yet to fully de­velop.

“The up­com­ing Hubei FTZ could pos­si­bly cut com­pa­nies’ fi­nan­cial costs in the area,” said Fu Cheng, chair­man of Ex­sun Elec­tron­ics and In­for­ma­tion Tech­nol­ogy Inc, a com­pany man­u­fac­tur­ing satel­lite po­si­tion­ing sys­tems in Wuhan, cap­i­tal of Hubei prov­ince.

He said if the Hubei FTZ adopts the op­er­at­ing mode of Qian­hai in Shen­zhen, where in­ter-com­pany trans­ac­tions are tax-free, and busi­nesses pay taxes an­nu­ally in­stead of monthly, then liq­uid­ity costs will be sig­nif­i­cantly re­duced. Now com­pa­nies have to pay tax as long as trans­ac­tions are billed, even if cus­tomers have yet to pay.

He Fei contributed to this story.

Con­tact the writer through zhong­nan@ chi­nadaily.com.cn

REUTERS

Cy­clists ride next to a sign of the China (Shang­hai) Pi­lot Free Trade Zone in Shang­hai.

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