China FTZs: S'pore expertise wanted

The Chinese Ministry of Commerce last month unveiled a list of seven new free trade zones in the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan and Shaanxi as well as Chongqing city (left).
The Chinese Ministry of Commerce last month unveiled a list of seven new free trade zones in the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan and Shaanxi as well as Chongqing city (left).PHOTO: AGENCE FRANCE-PRESSE

Xi says Republic can play a useful role in 7 new free trade zones recently announced

In a bid to lift growth, China has announced a new batch of free trade zones (FTZs), and it wants Singapore's help to develop them.

The Chinese Ministry of Commerce on Aug 31 unveiled a list of seven new FTZs in the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan and Shaanxi as well as Chongqing city, ahead of the Group of 20 summit this week.

This is seen by observers as China signalling to the world its resolve to push forward with reforms and opening up, against a global trend of rising protectionism.

And Singapore could play a useful role in these newly established FTZs, Chinese President Xi Jinping suggested to Prime Minister Lee Hsien Loong during their meeting in Hangzhou last week.

The first FTZ was set up in 2013 in Shanghai to test economic reforms such as more relaxed rules towards foreign investment. Three more were set up in 2014 in Fujian and Guangdong provinces, as well as Tianjin city.

The FTZs are different from the old free trade areas or special economic zones set up in the 1980s and 1990s, said trade law expert Henry Gao from Singapore Management University.

"They are not meant for boosting exports and foreign trade," he said.

  • Free trade zones in China

  • SHANGHAI FTZ

    •Opened in September 2013

    •To be a testbed for economic reforms including freeing up more sectors for foreign investments

  • GUANGDONG, FUJIAN, TIANJIN FTZs

    •Approved in December 2014

    •Guangdong FTZ serves to speed up economic integration with the neighbouring Hong Kong Special Administration Region; Fujian FTZ is focused on Taiwan, across the Taiwan Strait from Fujian province; and the Tianjin FTZ aims to link up the Bohai Bay area, which includes Beijing city and Hebei province

  • LIAONING, ZHEJIANG, HENAN, HUBEI, SICHUAN, SHAANXI, CHONGQING FTZs

    •Announced on Aug 31

    •North-eastern Liaoning province's FTZ will focus on market-oriented reforms to improve the competitiveness of the old industrial base

    •Coastal Zhejiang's FTZ will explore trade liberalisation of global commodities

    •Central Henan's FTZ will tap on its potential in transport and logistics

    •Central Hubei's FTZ will build high-tech bases and facilitate the development of the Yangtze River Economic Belt

    •Chongqing, Sichuan and Shaanxi FTZs in the country's west will help open up the less-developed regions to boost economic vitality

Instead, they serve to attract foreign investments and introduce administrative reforms to transform government functions from those of controls and approvals to a more service-oriented role, he said.

"Singapore's experience in attracting foreign investments and its successes in providing social services fit in nicely with the two main objectives of these FTZs," said Associate Professor Gao.

As Singapore has an open economy, it provides a good model for China in its overall economic opening-up strategy, said trade economist Sarah Tong of the East Asian Institute at the National University of Singapore.

Unlike the earlier FTZs, which are all along the eastern coast, the seven new ones include some in central and western China.

"This is more about opening up within China, and cooperation with South-east Asia (for trade and investment) is an important part of this inland opening," said Dr Tong.

Singapore could be a key partner in coordinating cooperation between China's inland regions and South-east Asia, she added.

Singapore business leader Teo Siong Seng, who has three shipping- related firms in the Shanghai FTZ, said that given Singapore's well-established trade and financial sectors, it can help give pointers on developing related industries.

While there have been criticisms of the FTZs already in place that advantages are limited, analysts said the slow progress is a reflection of the difficulties in pushing forward economic reforms following Mr Xi's 2013 announcement of an ambitious blueprint to do so.

Gone are the days of the almost- instant explosion of changes seen in special economic zones such as Shenzhen in the 1990s, Dr Tong noted. Back then, the political atmosphere was different and the system before opening up was rigid, she said. "Today, the economy is more sophisticated and the government is more cautious in rolling out financial reforms for fear of making disastrous mistakes."

Above all, differences between the local authorities running the FTZs and the central government pose the biggest challenge, said Prof Gao. "Singapore will not be able to help with this, but it can play a role on the micro-level, in specific areas such as urban management."

For example, he said, the authorities in the Fujian FTZ were interested to learn from Singapore in things such as TradeNet, an electronic platform for making Customs declarations.

With the FTZs, Singapore can continue to play an "irreplaceable role" in China's development, he said.

A version of this article appeared in the print edition of The Straits Times on September 10, 2016, with the headline 'China FTZs: S'pore expertise wanted'. Print Edition | Subscribe