Ten years of Shanghai FTZ: Leading China's reform and opening-up
Editor's note: Yang Hangjun is vice dean of the School of International Trade and Economics at the University of International Business and Economics. The article reflects the author's opinions and not necessarily the views of CGTN. It has been translated from Chinese and edited for brevity and clarity.
Since its establishment in 2013, the Shanghai Free Trade Zone (FTZ) has consistently focused on institutional innovation, benchmarking itself against the highest standards of investment and trade systems.
It has not only deeply served the national strategy of opening-up but also played a constructive role in demonstrating and leading the integrated development of the Yangtze River Delta and the Belt and Road Initiative, helping accumulate of experiences in bilateral and multilateral cooperation.
Institutional innovation draws more foreign investment
The Shanghai FTZ has attracted foreign investment and expedited the growth and structural optimization of foreign investment through open and transparent policies that facilitate investment and operations.
The country's foreign investment "negative list" management system has been implemented. After seven revisions, the list has been streamlined from 190 items in the 2013 version to 27 items in the 2021 version.
The government has considerably reduced approval restrictions on investment projects, transitioning from pre-implementation approval to concurrent and post-implementation supervision.
This reform has not only drawn in more foreign capital and transnational companies but also played a crucial role in improving the foreign investment management system, forming a high-level pilot free trade zone and developing a new institutional opening-up system.
Innovations in customs services enhance efficiency
The Shanghai FTZ has introduced a system-integrated, innovative and highly efficient customs service function.
Its pioneering "single window" platform for international trade has become the world’s largest local single window for international trade in terms of data processing, serving more than 600,000 companies, processing a quarter of the nation's import and export trade volume, and managing the throughput of 40 million containers in Shanghai every year.
The FTZ has also taken the lead in the institutional innovation of special supervision area of customs, initiating the "declaration after entry" and "self-transportation" practice between sections in the first line and resorting to the "separate distribution; centralized declaration" in the second line.
These innovative measures have simplified the cumbersome procedures for foreign trade and enhanced overall customs clearance efficiency, cutting the cost of goods for companies while boosting trade growth and structural optimization.
In the field of cross-border financial management, the opening-up and innovation of the financial system at the Shanghai FTZ have laid a solid foundation for the construction of international financial markets.
The current free trade account system has lowered risks and provided a convenient way for funds to flow in and out, facilitating the internationalization of financial markets and reducing corporate financing costs.
Thus, it has attracted numerous overseas companies from various sectors to establish themselves in the Shanghai FTZ, including Standard Chartered, IBM and Pfizer, as well as Tesla with its gigafactory.
This demonstrates the importance of financial opening-up and innovation, while emphasizing the necessity of risk management and regulation.
Promoting Shanghai's experience nationwide
About half of the replicable pilot reform experiences from the State Council come from the Shanghai FTZ's institutional innovation measures for the trade of goods.
By first experimenting the reform in pilot zones and gradually expanding opening-up, China has established more than 20 free trade zones and one free trade port. They are exerting influence in multiple provinces, providing robust support for the country's high-level opening-up.
The 10th anniversary of the Shanghai FTZ marks a new milestone in China's reform and opening-up journey with institutional innovation at its core.
Its success showcases China's vital achievements in boosting opening-up, attracting foreign investment, improving trade efficiency and internationalizing financial markets.
The growth of the Shanghai FTZ demonstrates China's unwavering commitment to reform and opening-up in the global arena, laying a solid foundation for "dual circulation", the new development strategy where the domestic market is the mainstay, and both domestic and international markets reinforce each other.
It will enable China to play a more pivotal role in global economic development.