Shanghai to build a free trade port

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Shanghai, where China’s first pilot free trade zone is located, is going to build a free trade port.

As a kind of free trade zone, free trade ports are usually located at transport and logistics hubs, with functions including more facilitation for overseas vessels and cargo. Bai Ming, deputy director of the International Market Research Institute with the Ministry of Commerce, was quoted in media interview.

A free trade port will enable the entry and exit of cargo, loading and unloading, repackaging, storage and transit, with tariff exemption on most goods in and out, he said.

Moreover, free trade ports can enjoy preferential policies such as being tariff free or having large tariff cuts, he added.

The plan for a free trade port is regarded as indicating China's determination enhance its opening-up.

“It’s a suggestion that what we are doing right now with the free trade zones is probably quite successful, and the experiments of free trade zones in Shanghai and Shenzhen both are going very well,” said Hong Hao, Chief china strategist of BOCOM International Holdings.

So why is Shanghai taking this step forward, instead of settling for its free trade zone?

Having a free trade zone or any other efforts to expand openness is crucial to economic development, Hong, who has been based in Hong Kong for many years, noted the port city is a good example due to what it has achieved economically over the past decades.

“Even today when the Chinese mainland has its own free trade zones and the competitiveness of Hong Kong port is slowly going down, still around 15 to 16 percent of the mainland’s imports and exports go through Hong Kong, which is a very significant part of Hong Kong economy,” Hong said.

Hong also mentioned that Hong Kong’s success took years to be built, and that includes not only low tax and great geographic location, but also a whole legal structure and a connection to the foreign trade system.

Now the concept of a free trade port has become a hot topic at the 19th CPC National Party Congress and delegates from many provinces are intrigued.

The city of Zhoushan in eastern China’s Zhejiang province, Tianjin and even northwest province Shaanxi all expressed their willingness to have a free trade port. Beijing already conducted feasibility studies months ago.

Hong said that with the experience learned from years of reform and opening-up, he will not be surprised to see China’s free trade ports catching up quickly.