Free Trade Zone Construction

Under new circumstances, the Communist Party of China (CPC) has taken a strategic step to build pilot free trade zones (FTZs) in a bid to deepen reform and expand opening up. The establishment of China (Sichuan) Pilot Free Trade Zone is a milestone in Sichuan’s reform and opening up.

It aims to test China’s development system and meanwhile promote local development in Sichuan. Since being listed on April 1, 2017, the FTZ has been focusing on its core task to promote institutional innovation.

Relevant parties have strengthened coordination to launch the work of the FTZ in a comprehensive way. So far, the managerial system has been rapidly innovated and the reform dividends have been gradually released. This good start has laid the groundwork for the FTZ.

1.Construction of the China (Sichuan) Pilot Free Trade Zone

**First, strengthening “three-level” management. **Leaders of Sichuan province have considered the pilot FTZ as a comprehensive, strategic and leading project and have vowed to improve the project with firm determination and solid measures. They have established a panel led by the governor of Sichuan Province in support of the FTZ. The panel has been set up under the framework of Sichuan Provincial Department of Commerce.

The Office of China (Sichuan) Pilot Free Trade Zone has also been established under the department, consisting of 20 personnel. The cities of Chengdu and Luzhou both have set up working groups led by municipal leaders.

Respectively, Chengdu has created the organizational structure of the "1+4+8", which is supported by the administrative committee of the FTZ, the administrative committee of four districts in Chengdu, and the eight functional groups for promotion; while Luzhou is in charge of three districts, namely Longmatan District, the Yangtze River economic Development Zone and the FTZ, which all have set up their own working groups in this regard.

Second, establishing a management mode of setting lists of goals and meanwhile ensuring their implementation. The implementation process is monitored by a monthly checked and quarterly evaluated system.

There are five lists of goals covering the first batch of tasks, innovative measures, good practices, provincial management items as well as the overall action plan.

The Priority Tasks for 2017 has also been formulated, which identified 21 key tasks, 82 tasks for reform and 31 innovative measures of Sichuan Province.

Third, strengthening the supporting policies for top-level design. The Administrative Measures for Sichuan Free Trade Zone, which includes 66 regulations, has been issued by the Sichuan government, aiming to establish a mechanism that encourages innovations.

A total of 415 feasible supporting policies have been launched by five national ministries and commissions, six divisions of central institutions in Sichuan province, and four provincial departments.

The Bureau of Statistics of Sichuan Province has been actively participating in the system design to monitor the indicators for the FTZ.

The municipal court and procuratorate of Chengdu have provided the legal support for the FTZ. Besides, Sichuan provincial government has issued 28 suggestions on policy-making for spurring investments, which have improved the FTZ’s competitiveness to attract foreign investments.

**Fourth, promoting the experience of the FTZ. Among the 123 good practices for FTZs promoted by the State Council, Sichuan has implemented 121 of them. **Chengdu has collected 369 useful cases from previously launched FTZs and selected 73 of them to compile a brochure of reference.

Yibin Lingang Economic and Technological Development Zone has joined hands with the South Sichuan Port Area in creating a model for free trade reform.

A strategic cooperation mechanism will be established between Sichuan Province and Guangdong Province to share information, promote innovation and co-build development model and meanwhile conduct experiments in the fields of investments, trade, finance and logistics.

**Fifth, strengthening personnel training. **The projects of “Coming In” and “Going Out” have trained nearly 5000 personnel in free trade at multiple levels.

The Organization Department of Sichuan province and its Department of Commerce have jointly organized a seminar on the Sichuan Pilot FTZ in Shanghai and have trained 100 officials in Sichuan. The province has sent personnel to the Ministry of Commerce and other FTZs to learn from their practices and experience.

The FTZ has adopted a market-oriented approach to introduce talents, optimize the employment mechanism and strengthen capacity building. Sichuan Province has been developing think tanks for the FTZ. It has launched seven major research projects and has held a forum entitled Pilot Free Trade Zone And Development In Western China.

2.

Breakthroughs in institutional innovation

More than 60 good practices have been discovered. The Sichuan FTZ has declared two of them to the State Council as models for promotion.

One is China-Europe multi-model transport bill of lading, the other is new mode of inspection and quarantine supervision for international exhibition. Sichuan plans to declare 20 more such practices and promote them across the province.

First, exploring new system of investment and management. Sichuan has been promoting an Internet-based business registration system. It also allows one enterprise address host multiple enterprises for registration.

Besides, formalities concerning national tax and local tax can be completed at one place. In the South Sichuan Port Area, the process of government review and approval as well as registration procedures has also been largely simplified.

Second, enhancing trade facilitation. The new mode of inspection and quarantine supervision for international exhibitions will guarantee the rapid and simplified inspective process for the exhibits. The regulatory mode for maintenance of foreign products in China has also been innovated.

As for low-risk products such as aircraft engines, materials for their maintenance can be approved to enter into China once being declared to customs. This innovative policy can shorten the period for customs entry for one or two days. Estimates show it can also save companies who need iPad maintenance more than one million yuan per year.

In addition, the “Single Window” for international trade in South Sichuan Port Area has been operating online, so has the “Internet+” platform for customs registration. These innovative polices aim to explore joint inspection and “Trust Mode” customs clearance and create a “Zero Cost” port.

**Third, promoting reform and innovations in the financial sector. **China-Europe multimodal transport bill of lading can simplify the whole process with “one delegation,” “one quotation,” “one deal” and “one ticket settlement.” So far, five deals have been made by this way to import cars.

The first bonds for “innovation for all” have been issued in Chengdu. Sichuan has also set up mediation center to resolve disputes in banking industry. Big data has been used to carry out credit supervision.

Fourth, exploring the system of supervision. The public credit information system in Chengdu has been upgraded which has gathered the information of nearly 2.7 million legit individuals, including 17,000 focus ones, accounting for 4,000 million entries.

In the area of tax supervision, the first violation of tax regulations can be waivered from punishment, giving an exception for those who may be unfamiliar with the tax regulations, and in this way help the public to raise awareness in tax paying.

A system where informants can report on intellectual property criminal cases from both public security organs and procuratorial organs has been established to help alleviate the difficulties caused by the evidence seeking.

International standards on food safety have been introduced for quality management of food production and the upgrading of the food industry. A platform of legal support has been established to provide service for mediation, arbitration, public law inspection and notarization. The legal alliance for Belt and Road Initiative has also been established.

3. Vitality of the Sichuan FTZ

First, increasing market entities. As of August 31, more than 13,000 enterprises have established in the Free Trade Zone, with a registered capital of 1,800 billion yuan.

Among them, 11,000 have been registered in Chengdu area, with a registered capital of over 170 billion yuan, accounting for 87.7% and 93.5% respectively of the province’s total; in the port area of Southern Sichuan, nearly 2,000 enterprises have been registered with a capital of more than 10 billion yuan.

Second, facilitating trade and investment. With more than 95% of the foreign-invested enterprises applied with the record-keeping of foreign-invested enterprises, record materials are reduced by 90%, and the processing time is reduced by more than 50%.

Chengdu customs clearance area ranks at the top across the country, of which import costs 8.84 hours, while exports 0.75 hours, 6.26 and 0.45 hours shorter respectively than 2016. In port area of Southern Sichuan, the examination time is reduced by 80%.

**Third, accelerating gathering of high-end industries. **There are 350 new projects in the FTZ, of which 131 are valued over 100 million yuan, mainly in the area of finance leasing, headquarters economy, intelligent terminal, modern logistics, cultural tourism, international trade, equipment manufacturing and other industries.

The first aircraft finance leasing company in China’s West, the country's first large-scale logistics unmanned aerial vehicle headquarters are both based in Chengdu; Luzhou, on the other hand, introduced the first intelligent terminal industry chain project.

Fourth, robust development of open economy. Taking advantage of the effect of the pilot FTZ, investment promotion is conducted, the cooperation week of Sichuan, Hong Kong and Macau is successfully held, the foreign consular tour of Sichuan and the promotion fair of port areas of Southern Sichuan are carried out. There are now 119 foreign investment enterprises newly estabished in the FTZ, surpassing 1/3 of the province's total.

Imports and exports of the FTZ have increased by several of dozens of times, making Sichuan return to the first place in central and western China in foreign trade volume .

Also this year, the China-Europe Railway Express (Chengdu) has run more than 500 journeys, ranking first in the country, accounting for 1/3 of the total number of trains between China and Europe.

(ASIA PACIFIC DAILY)