The State Council, China’s cabinet, approved the establishment of seven pilot free trade zones in Liaoning, Zhejiang, Henan, Hubei, Sichuan, Shaanxi as well as Chongqing municipality, according to an official statement released on March 31, 2017. And on April 1, the seven zones were offically open.
In terms of the issued general planning, Hubei FTZ has the responsibility to foster the new engine of regional economic development, explore new ways for deepening reforms and furthering opening up, thereby forming a replicable model.
The general planning also makes it clear that Hubei FTZ should take the system innovation as the core, becoming the demonstration zone for carrying on industry transfer in central China, the cluster of high-tech industries and strategic emerging industries, the experimental field for comprehensive reform and the leader of inland open economy.
Hubei FTZ will be built on an area of 119.96 square kilometers, covering three areas in Wuhan (up to 70 square kilometers, including the 5.14-square-kilometer East Lake Comprehensive Bonded Zone), Xiangyang (up to 21.99 kilometers, including the 0.281-square-kilometer Xiangyang Bonded Logistic Center) and Yichang (up to 27.97 square kilometers).
The three zones have their own specialized fields. Wuhan area will focus on the emerging industries like IT, biotechnology and intelligent manufacturing, as well as the modern service industries relating to international trade, financial services, modern logistics, inspection & testing, R&D, information services, professional services, etc; Xiangyang area will eye on the industries of high-end equipment manufacturing, new energy vehicles, big data, cloud computing, Trade logistics, inspection & testing, etc; Yichang area will give priority to the development of modern services industries regarding dvanced manufacturing, biomedicine, electronic information, new material, R&D, headquarter economy e-commerce, etc.
1. What is the free trade zone (FTZ)?
A free-trade zone (FTZ) is a specific class of special economic zone. It is a geographic area where goods may be landed, stored, handled, manufactured, or reconfigured, and re-exported under specific customs regulation and generally not subject to customs duty. Free trade zones are generally organized around major seaports, international airports, and national frontiers—areas with many geographic advantages for trade.
2. 11 FTZs in China
In late 2014, Tianjin, Fujian and Guangdong were approved to be the second group of FTZs.
On April 1, 2017, seven new FTZs in the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan and Shaanxi as well as Chongqing municipality, opened in China.
3. Benefits brought along for Hubei residents
FTZ will contribute to reducing or eliminating foreign investment access restrictions, furthering the opening of service and manufacturing sectors. In the field of commerce and trade, it will help cancel or reduce the access restrictions on qualifications, equity ratio, and business operating ranges of extraterritorial investors. Lowering the entry barriers of foreign investments will greatly improve the openness of Hubei and Wuhan, resulting in more world-class foreign enterprises coming to Wuhan, bringing their advanced ideas in business and services. Wuhan citizens will enjoy more high quality goods and services in line with international standards.
As the cross-border e-commerce gets an entry pass for the Wuhan market, people will be able to buy more imported goods at lower prices. Services for goods changing and refunding will be more convenient.
An automobile parallel import trial is being undertaken in the pilot free trade zone. Importers will provide after-sale services, recalling services, and services for repair, replacement, or compensation for faulty products. Wuhan citizens may obtain luxury cars at lower prices and enjoy better services.
In the FTZ, foreign invested commercial insurance companies and pawnshops will be open. People will have access to more financial and insurance products in line with international standards, and enjoy more overseas investment opportunities and better investment banking services.