A sunrise view of China (Shanghai) Pilot Free Trade Zone, Sept. 9, 2023./ CFP
Editor's note: Yang Hangjun is the vice dean of the School of International Trade and Economics, University of International Business and Economics. The article reflects the author's opinions and not necessarily the views of CGTN.
Since its establishment in 2013, the China (Shanghai) Pilot Free Trade Zone (hereinafter shortened as the Shanghai Free Trade Zone) has been a resounding success as a pioneering ground for China's opening up and institutional innovation. Now, on the occasion of the 11th anniversary of the Shanghai Free Trade Zone, reflecting on its development journey and looking ahead at the changing global political and economic landscape reminds us of the significant historical importance of this initiative.
Achievements in Institutional Innovation of the Shanghai Free Trade Zone
From its inception, the Shanghai Free Trade Zone has centered on institutional innovation with a series of achievements made in this regard nationwide, such as the negative list for foreign investment, the international trade "single window", free trade accounts, the separation of operating permits from business licenses, and the "one integrated license" initiative. These innovations have first taken root in Shanghai and then quickly spread across the country. Over the past 11 years, the Shanghai Free Trade Zone has consistently adhered to the highest standards and pursued optimal levels. It has developed an investment management system with a negative list at its core, an innovative trade supervision system focused on trade liberalization and facilitation, and a financial innovation system aimed at marketization and internationalization, thereby steadily advancing into the deep waters of the country's reform and opening up. Take the negative list for foreign investment as an example. According to data from the Ministry of Commerce, the negative list for foreign investment in free trade zones nationwide has undergone seven reductions, dropping from an initial 190 items in 2013 to the current 27 items, with none in the manufacturing sector. These critical achievements fully demonstrate that, as a crucial gateway for opening up, the door of free trade zones will be opened wider, and the path of opening up will become broader.
A bird's eye view of buildings in Shanghai Free Trade Zone, Sept. 9, 2023./ CFP
The Necessity of Aligning with High-standard International Economic and Trade Rules
The world is undergoing changes of a magnitude unseen in a century, especially in the economic field, where regional multilateral systems are gradually replacing traditional global multilateral systems. Cross-regional free trade agreements like CPTPP and RCEP are sprouting up. The introduction and evolution of rules and systems are becoming the main theme of present international trade competition and cooperation, profoundly impacting the global trade landscape. These agreements have not only covered traditional international trade issues but also penetrated into domestic policy areas such as state-owned enterprises, intellectual property, labor rights, and environmental protection, proposing unprecedentedly high standards. Therefore, with the establishment of the Shanghai Free Trade Zone as the starting point, China has entered a new phase of institutional opening up, benchmarking itself against high-standard international investment and trade rules. To date, 22 free trade zones have been set up in China. The establishment of the free trade zones is not only for pioneering trial initiatives but also for taking a leading position in global economic competition. Through stress testing, China has explored and formulated economic rules and systems tailored to national conditions and meet with international high standards.
Night scene of Luijiazui and the Huangpu River in Shanghai./ CFP
Prospects for Further Advancing High-Level Institutional Opening Up
The free trade zone system is not only a step that must be taken to meet external challenges but also an imperative force addressing the urgent need for internal economic transformation and upgrading, and pushing forward reforms in China. The pioneering trials in free trade zones have enabled China to accumulate experience in financial reforms, administrative approval system reforms, among others, and gradually promoted successful reform measures nationwide, thus propelling the transformation and upgrading of the overall economic system. By relaxing market access conditions and optimizing the business environment, free trade zones across the country have attracted massive amounts of high-quality foreign capital, which has contributed to the optimization and upgrading of domestic industrial structures and accelerated China's deep integration with international markets.
Reform has always been an ongoing journey. While promoting rule-based institutional opening up through the free trade zone system, it is essential to seize the opportunity presented by the implementation of the General Plan for Advancing Institutional Opening-up of China (Shanghai) Pilot Free Trade Zone in Alignment with High-standard International Economic and Trade Rules, resolutely pushing institutional reforms to new heights, exploring a more comprehensive and open "behind-the-border" regulatory system, and advancing comprehensive rule alignment and breakthrough innovations in frontier trade areas such as government procurement, state-owned enterprises, environmental protection, and labor. In this way, China will continually contribute its wisdom to global trade development.