Page 72 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
of 2016, 4,923 foreign-funded firms were established are now open to foreign capital. Rules on banking
in the four FTZs, with investment totaling 359 billion services, which in the past forbade foreign banks from
yuan. The first two sets of zones successfully introduced underwriting Chinese government bonds, have also been
a “negative list,” which specified the investment sectors eased. The State Council announced an easing of curbs
off-limits to foreign investors and allowed industries on foreign investment, in sectors such as banking, credit
not on the list to follow the same new investment rules ratings and accounting earlier in 2017, but gave no details
as domestic firms. The four FTZs have attracted 10 or timeframe for the relaxation (Chen and Woo).
percent of the country’s total foreign investment. At the
beginning of 2018, one third of Chinese provincial-level The new FTZs are important for the opening-up of
areas have FTZs. Five of them are in inland provinces and the country’s landlocked central and western regions.
six are along the coast. FTZs will help carry out major “The first and second groups of FTZs are based in
national endeavors such as the Belt and Road Initiative, the country’s most developed coastal regions. Their
the Yangtze Economic Belt and the development of successful experience would not necessarily work for
central and western China. Liaoning Province will focus inland areas,” said Xing Houyuan, Deputy Director of the
on reinvigorating the Rust Belt, an industrial area in Service Outsourcing Research Center of the Ministry of
China’s northeast. Zhejiang is expected to capitalize on Commerce. There is a gap between coastal and inland
its e-commerce power and develop bulk commodities areas in terms of development and governance, and they
businesses. Henan will use its strategic location in China’s have different favorable industries, according to Xing.
heartland and grow stronger as a regional logistics The coastal FTZs have proven effective in stimulating
hub. Hubei will spearhead the building of the Yangtze regional economies, but it could be a challenge for the
Economic Belt, named after the river that flows through third group, located in relatively backward areas, to
the province. Chongqing and its neighbor, Sichuan, will attain similar effects, she said. “We expect more specific
be built in an inland area for opening-up. Shanxi will policies to be made in accordance with the FTZ status in
seek to develop cultural and economic relations with Henan and, more importantly, in line with the conditions
countries along the Silk Road. “The plan for the FTZs and realities of individual areas,” said Du Mingjun, an
reflects that China wants to build an open economy economics researcher in Henan (Yu).
as a whole, but before doing that, it has to experiment
with FTZs in different parts of the country,” said Lu The overall plans pinpoint the need for the pilot
Shanbing, Deputy Director of the Silk Road Research FTZs to take institutional innovation as their primary
Institute of Northwest University. “The FTZs will not task and the accumulation of replicable and scalable
prioritize a certain area, rather, they will help coordinate experience as their basic requirement. They will take the
development between the mid-west and the east and lead to tap the potential of reform in many areas such
close the gaps,” he said (Yu). as building new open economic systems, new inland
open economic development models, and a rules-based,
Newly signed FTZ projects cover various fields such facilitative, international business environment. They
as high-end manufacturing, finance, and international deepen the reform of the administrative system, improve
logistics services. China removed 27 restrictions in its administrative efficiency, and further advance the
newly issued negative list for foreign investment in its reform of streamlining administration and delegating
FTZs in June 2017. Chinese leaders have pledged to open power to the lower levels. They will also promote the
the world’s second largest economy wider to foreign implementation of the strategies of western region
investors but a negative list specifying the areas off limits development, revitalizing northeastern China, bringing
to foreign capital is in place for its eleven FTZs, which about the rise of the central region, developing the
enjoy looser trade and financial regulations on a trial Yangtze River Economic Belt, and the Belt and Road
basis. Among the beneficiaries of the new negative list Initiative (HKMB). The following details have been
across more than 20 industries are foreign makers of rail released explaining why each FTZ has been chosen:
transport equipment and civilian satellites, who will no
longer be obliged to enter a joint venture with Chinese Liaoning: reignite the competitiveness of northeast
partners or let the Chinese side take the majority share. China’s traditional industries consequently opening up
Previously restricted sectors such as precious metals and new sectors for foreign investment.
lithium mining, as well as Internet access services, credit
rating services, and large-scale theme park construction
72
of 2016, 4,923 foreign-funded firms were established are now open to foreign capital. Rules on banking
in the four FTZs, with investment totaling 359 billion services, which in the past forbade foreign banks from
yuan. The first two sets of zones successfully introduced underwriting Chinese government bonds, have also been
a “negative list,” which specified the investment sectors eased. The State Council announced an easing of curbs
off-limits to foreign investors and allowed industries on foreign investment, in sectors such as banking, credit
not on the list to follow the same new investment rules ratings and accounting earlier in 2017, but gave no details
as domestic firms. The four FTZs have attracted 10 or timeframe for the relaxation (Chen and Woo).
percent of the country’s total foreign investment. At the
beginning of 2018, one third of Chinese provincial-level The new FTZs are important for the opening-up of
areas have FTZs. Five of them are in inland provinces and the country’s landlocked central and western regions.
six are along the coast. FTZs will help carry out major “The first and second groups of FTZs are based in
national endeavors such as the Belt and Road Initiative, the country’s most developed coastal regions. Their
the Yangtze Economic Belt and the development of successful experience would not necessarily work for
central and western China. Liaoning Province will focus inland areas,” said Xing Houyuan, Deputy Director of the
on reinvigorating the Rust Belt, an industrial area in Service Outsourcing Research Center of the Ministry of
China’s northeast. Zhejiang is expected to capitalize on Commerce. There is a gap between coastal and inland
its e-commerce power and develop bulk commodities areas in terms of development and governance, and they
businesses. Henan will use its strategic location in China’s have different favorable industries, according to Xing.
heartland and grow stronger as a regional logistics The coastal FTZs have proven effective in stimulating
hub. Hubei will spearhead the building of the Yangtze regional economies, but it could be a challenge for the
Economic Belt, named after the river that flows through third group, located in relatively backward areas, to
the province. Chongqing and its neighbor, Sichuan, will attain similar effects, she said. “We expect more specific
be built in an inland area for opening-up. Shanxi will policies to be made in accordance with the FTZ status in
seek to develop cultural and economic relations with Henan and, more importantly, in line with the conditions
countries along the Silk Road. “The plan for the FTZs and realities of individual areas,” said Du Mingjun, an
reflects that China wants to build an open economy economics researcher in Henan (Yu).
as a whole, but before doing that, it has to experiment
with FTZs in different parts of the country,” said Lu The overall plans pinpoint the need for the pilot
Shanbing, Deputy Director of the Silk Road Research FTZs to take institutional innovation as their primary
Institute of Northwest University. “The FTZs will not task and the accumulation of replicable and scalable
prioritize a certain area, rather, they will help coordinate experience as their basic requirement. They will take the
development between the mid-west and the east and lead to tap the potential of reform in many areas such
close the gaps,” he said (Yu). as building new open economic systems, new inland
open economic development models, and a rules-based,
Newly signed FTZ projects cover various fields such facilitative, international business environment. They
as high-end manufacturing, finance, and international deepen the reform of the administrative system, improve
logistics services. China removed 27 restrictions in its administrative efficiency, and further advance the
newly issued negative list for foreign investment in its reform of streamlining administration and delegating
FTZs in June 2017. Chinese leaders have pledged to open power to the lower levels. They will also promote the
the world’s second largest economy wider to foreign implementation of the strategies of western region
investors but a negative list specifying the areas off limits development, revitalizing northeastern China, bringing
to foreign capital is in place for its eleven FTZs, which about the rise of the central region, developing the
enjoy looser trade and financial regulations on a trial Yangtze River Economic Belt, and the Belt and Road
basis. Among the beneficiaries of the new negative list Initiative (HKMB). The following details have been
across more than 20 industries are foreign makers of rail released explaining why each FTZ has been chosen:
transport equipment and civilian satellites, who will no
longer be obliged to enter a joint venture with Chinese Liaoning: reignite the competitiveness of northeast
partners or let the Chinese side take the majority share. China’s traditional industries consequently opening up
Previously restricted sectors such as precious metals and new sectors for foreign investment.
lithium mining, as well as Internet access services, credit
rating services, and large-scale theme park construction
72
