An aerial view of the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone on Sept 9, 2023. [Photo/VCG]

Innovations, high-standard opening-up set benchmark for other free-trade zones

China (Shanghai) Pilot Free Trade Zone, the first of its kind in China, should increase institutional innovation and resource allocation so as to emerge successful in its attempts to bolster the country's efforts for high-quality development, officials and experts said on Wednesday.

Attending a forum to mark the 10th anniversary of the Shanghai FTZ, they said the zone should upgrade its economic capacity.

Chen Jining, Party secretary of Shanghai, said the Shanghai FTZ should further advance institutional opening-up by aligning with high-level international economic and trade rules, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economic Partnership Agreement.

The CPTPP is a free-trade agreement between 11 countries in the Asia-Pacific region. The DEPA is a digitally focused trade deal initiated by Singapore, New Zealand and Chile that China is keen to join.

Institutional reform in trade and investment should be deepened, while new business models, such as digital trade and green trade, should be able to seek substantial development in the Shanghai FTZ, said Chen.

Efforts will be made to align with the border measures mentioned in the CPTPP and the DEPA so that breakthroughs in tariff structures and market entry policies can be first made in the Shanghai FTZ, Shanghai Mayor Gong Zheng said at the forum.

In terms of further facilitating free trade and investment, key areas like finance, telecommunications and medicine will be further opened up in the Shanghai FTZ, said Gong.

The industrial system in the Shanghai FTZ should be upgraded to provide new economic drivers not only for Shanghai but the whole country. Therefore, mapping in emerging fields like the digital economy, low carbon emissions, metaverse and smart devices will be made so that the FTZ can prepare for future competition, he said.

Development of new business models, such as cross-border finance, bonded research and development, bonded maintenance and remanufacturing, should help make the Shanghai FTZ stand out in the near future, enabling it to better connect with the global market, Gong said.

Bonded R&D implies that items imported for R&D purposes do not attract tariffs.

Zhou Hanmin, a Standing Committee member of the National Committee of the Chinese People's Political Consultative Conference, China's top political advisory body, said the Shanghai FTZ is already quite mature in terms of the development of cross-border trade in services and digital trade. It can thus conduct trials or pilot programs, pioneer trends and carry out larger stress tests in those two areas, to connect deeply with the CPTPP and the DEPA.

To promote high-standard opening-up, the Shanghai FTZ will introduce pilot measures in trade in goods, trade in services, temporary entry of business personnel, digital trade, business environment, and risk prevention and control, according to the White Paper on the 10th Anniversary of the Shanghai FTZ released by the zone's administrative committee on Wednesday.

Launched on Sept 29, 2013, the Shanghai FTZ now covers more than 240 square kilometers, having undergone two expansions in 2014 and 2019. A recent move included the Lingang Special Area in the FTZ. Some 21 FTZs, including the Shanghai FTZ, have been set up in China so far.

Of the 302 institutional innovative measures that were first rolled out in the 21 Chinese FTZs and extended nationwide later, 145 debuted in the Shanghai FTZ. Among them is the well-known negative list mechanism for foreign investment.

New energy vehicle maker Tesla was drawn by the various institutional innovations and favorable policies in the Shanghai FTZ to set up its Lin-gang-based gigafactory. The first of its kind outside the United States, the Tesla gigafactory has made 2 million cars since it started mass production in January 2020.

The company's vice-president, Tao Lin, said the Shanghai FTZ will grow into an international role model, illustrating the positive correlation between improving business environment and companies' innovations.

According to the report released during the 20th National Congress of the Communist Party of China in October, FTZs in China should be "upgraded" to be part of the country's efforts to promote high-standard opening-up.