Page 70 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
productivity as well as significant transformation of the zones and is used to try and explore policies for
structure of its economy (Yueh). modernizing Chinese businesses. Unlike other types of
special economic zones (SEZ), FTZs can experiment with
Since initiating market reforms in 1978, China has financial models and attract investment.
shifted from a centrally planned to a market-based
economy and has experienced rapid economic and FTZs
social development. GDP growth has averaged nearly
10 percent a year—the fastest sustained expansion by A third group of FTZs, including seven Chinese
a major economy in history—and has lifted more than provinces and municipalities began operation in April
800 million people out of poverty. China reached all 2017. The State Council approved the seven new zones
the Millennium Development Goals (MDGs) by 2015 in the Provinces of Liaoning, Zhejiang, Henan, Hubei,
and made a major contribution to the achievement of Sichuan and Shaanxi as well as Chongqing Municipality.
the MDGs globally. Although China’s GDP growth has China established its first FTZ in Shanghai in 2013 in
gradually slowed since 2012, it is still impressive by order to:
current global standards. China has been the largest
contributor to world growth since the global financial Maintain and increase its competitive edge;
crisis of 2008, yet China remains a developing country (its Transition to a more market-friendly regulatory environment;
per capita income is still a fraction of that in advanced Internationalize the RMB; and,
countries) and its market reforms are incomplete. Test new strategies for reform with intent to duplicate.
According to China’s current poverty standard, there
were 55 million poor in rural areas in 2015. Rapid By implementing policies meant to fulfill these
economic ascendance has brought on many challenges goals, the Shanghai FTZ laid the foundation for FTZs
as well, including high inequality; rapid urbanization; nationwide. It relaxed incorporation requirements,
challenges to environmental sustainability; and external adopted the use of the Negative List for pre-approval
imbalances. China also faces demographic pressures procedures, and implemented a one-stop application
related to an aging population and the internal process, all measures which were eventually adopted
migration of labor. Significant policy adjustments are nationwide. China later expanded to three more
required in order for China’s growth to be sustainable. provincial-level areas of Tianjin, Fujian and Guangdong.
Experience shows that transitioning from middle- China’s existing four FTZs are located on the coast
income to high-income status can be more difficult than in Shanghai, Tianjin, Guangdong and Fujian. These
moving up from low to middle income. Both China’s areas were chosen for their geographical advantages
12th Five Year Plan (2011-2015) and 13th Five Year for trade such as their proximity to major seaports
Plan (2016-2020) forcefully address these issues. They and international airports. Conversely, five of the
highlight the development of services and measures to new FTZs are located inland. The Chinese Minister of
address environmental and social imbalances, setting Commerce, Gao Hucheng, stated that this is reflective
targets to reduce pollution, to increase energy efficiency, of that fact that Central and Western China will be the
to improve access to education and healthcare, and to ‘new frontier’ for foreign investment in China, in line
expand social protection. The annual growth target in with its ‘One Belt One Road’ policy (Beckett et al.). This
the 12th Five Year Plan was 7 percent and the growth time, the government assigned strategic positions
target in the 13th Five Year Plan is 6.5 percent, reflecting for each of the FTZs: Fujian supports trade with
the rebalancing of the economy and the focus on the Taiwan; Guangdong supports economic integration
quality of growth while still maintaining the objective of with Hong Kong and Macao; and, Tianjin supports
achieving a “moderately prosperous society” (Overview). the northeastern region and helps develop offshore
financial markets (Erdenebileg).
China’s experimental free trade zones (FTZs) are
special areas where goods may be landed, handled, The new FTZs bring the total number of the zones
manufactured and re-exported without intervention to eleven. The decision carries strategic importance in
of the customs authority. China’s first FTZ opened in terms of opening up and reform, cutting bureaucratic
Shanghai in 2013 and was seen as a blueprint for further red tape and exploring financial innovation. According to
international development. It replaced the previous the Ministry of Commerce, more than 90,000 companies
“low-cost land policy” of the more traditional industrial were set up in four trade zones as of 2015. In the first half
70
productivity as well as significant transformation of the zones and is used to try and explore policies for
structure of its economy (Yueh). modernizing Chinese businesses. Unlike other types of
special economic zones (SEZ), FTZs can experiment with
Since initiating market reforms in 1978, China has financial models and attract investment.
shifted from a centrally planned to a market-based
economy and has experienced rapid economic and FTZs
social development. GDP growth has averaged nearly
10 percent a year—the fastest sustained expansion by A third group of FTZs, including seven Chinese
a major economy in history—and has lifted more than provinces and municipalities began operation in April
800 million people out of poverty. China reached all 2017. The State Council approved the seven new zones
the Millennium Development Goals (MDGs) by 2015 in the Provinces of Liaoning, Zhejiang, Henan, Hubei,
and made a major contribution to the achievement of Sichuan and Shaanxi as well as Chongqing Municipality.
the MDGs globally. Although China’s GDP growth has China established its first FTZ in Shanghai in 2013 in
gradually slowed since 2012, it is still impressive by order to:
current global standards. China has been the largest
contributor to world growth since the global financial Maintain and increase its competitive edge;
crisis of 2008, yet China remains a developing country (its Transition to a more market-friendly regulatory environment;
per capita income is still a fraction of that in advanced Internationalize the RMB; and,
countries) and its market reforms are incomplete. Test new strategies for reform with intent to duplicate.
According to China’s current poverty standard, there
were 55 million poor in rural areas in 2015. Rapid By implementing policies meant to fulfill these
economic ascendance has brought on many challenges goals, the Shanghai FTZ laid the foundation for FTZs
as well, including high inequality; rapid urbanization; nationwide. It relaxed incorporation requirements,
challenges to environmental sustainability; and external adopted the use of the Negative List for pre-approval
imbalances. China also faces demographic pressures procedures, and implemented a one-stop application
related to an aging population and the internal process, all measures which were eventually adopted
migration of labor. Significant policy adjustments are nationwide. China later expanded to three more
required in order for China’s growth to be sustainable. provincial-level areas of Tianjin, Fujian and Guangdong.
Experience shows that transitioning from middle- China’s existing four FTZs are located on the coast
income to high-income status can be more difficult than in Shanghai, Tianjin, Guangdong and Fujian. These
moving up from low to middle income. Both China’s areas were chosen for their geographical advantages
12th Five Year Plan (2011-2015) and 13th Five Year for trade such as their proximity to major seaports
Plan (2016-2020) forcefully address these issues. They and international airports. Conversely, five of the
highlight the development of services and measures to new FTZs are located inland. The Chinese Minister of
address environmental and social imbalances, setting Commerce, Gao Hucheng, stated that this is reflective
targets to reduce pollution, to increase energy efficiency, of that fact that Central and Western China will be the
to improve access to education and healthcare, and to ‘new frontier’ for foreign investment in China, in line
expand social protection. The annual growth target in with its ‘One Belt One Road’ policy (Beckett et al.). This
the 12th Five Year Plan was 7 percent and the growth time, the government assigned strategic positions
target in the 13th Five Year Plan is 6.5 percent, reflecting for each of the FTZs: Fujian supports trade with
the rebalancing of the economy and the focus on the Taiwan; Guangdong supports economic integration
quality of growth while still maintaining the objective of with Hong Kong and Macao; and, Tianjin supports
achieving a “moderately prosperous society” (Overview). the northeastern region and helps develop offshore
financial markets (Erdenebileg).
China’s experimental free trade zones (FTZs) are
special areas where goods may be landed, handled, The new FTZs bring the total number of the zones
manufactured and re-exported without intervention to eleven. The decision carries strategic importance in
of the customs authority. China’s first FTZ opened in terms of opening up and reform, cutting bureaucratic
Shanghai in 2013 and was seen as a blueprint for further red tape and exploring financial innovation. According to
international development. It replaced the previous the Ministry of Commerce, more than 90,000 companies
“low-cost land policy” of the more traditional industrial were set up in four trade zones as of 2015. In the first half
70
