A view of China (Shanghai) Pilot Free Trade Zone on 8 July (VCG)

Since the 18th National Congress of the Communist Party of China held in 2012, the construction of pilot free trade zone has emerged as a strategically important approach for China’s reform and opening up efforts. These zones exemplify China’s proactive and open strategy, serving as a key driver for promoting high-quality development. In September 2013, China launched its first pilot free trade zone, China (Shanghai) Pilot Free Trade Zone. Over the past decade, 21 additional pilot free trade zones have been established across the country. This expansion has created a comprehensive reform and opening up innovation agenda that spans the eastern, western, southern, northern, and central regions, while integrating coastal, inland, and border areas. 

How will China construct higher-level pilot free trade zones in the future? How will this initiative help to share the benefits of China’s development with the world? Three Chinese experts provide answers. 

Extraordinary achievements 

Zhao Zhongxiu 

President, University of International Business and Economics 

According to data released by the Ministry of Commerce, in 2023, the 22 pilot free trade zones collectively achieved an import and export volume of 7.67 trillion yuan ($1.05 trillion) and attracted a total of 208.64 billion yuan ($28.7 billion) in foreign investment. Despite their small geographic area, these zones contributed to 18.4 percent of the country’s total foreign trade and foreign investment, underscoring their crucial role in stabilising foreign trade and investment. As important experimental platforms for deepening reform and expanding opening up in China, institutional innovation remains the core focus of this initiative. 

In terms of reforms related to foreign investment, the establishment of the pre-entry national treatment plus negative list management system under the Foreign Investment Law represents a significant achievement. Regarding trade transformation and upgrading, the implementation of the international trade single window system has driven nationwide trade facilitation. Currently, the paperless customs clearance rate has exceeded 90 percent, and the overall customs clearance time for import and export of goods has been reduced from 33 hours to 3.12 hours.  

In pilot free trade zones, reforms on government functions have mainly included streamlining administration, delegating power, improving regulation and upgrading services. New business management approaches have been established in these zones to streamline administration and delegate power. These include changing the registered capital system from actual paid-in registered capital to commitment to payment of registered capital, allowing companies seeking registration to obtain their business licenses before obtaining administrative permits, separating permits from business licenses, integrating multiple certifications and licenses into one consolidated business license, and implementing a single window for approval and registration. 

New opportunities  

Kong Qingfeng 

Professor, School of Economics, Shandong University, and Chief Expert, Shandong University Free Trade Zone Research Institute 

The opportunities facing China’s pilot free trade zones mainly manifest in four aspects. 

Firstly, the Belt and Road Initiative (BRI) provides new opportunities for the development of pilot free trade zones. The BRI is part of the top-down design for constructing a new system for an open economy in China, aiming to promote common prosperity, mutual benefit, and peaceful development among countries. Complementary to the pilot free trade zones, it achieves all-round opening up by building connections with other countries over land and sea while creating synergy between the eastern and western regions.  

Secondly, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Digital Economy Partnership Agreement offer a benchmark of high international standards in trade and digital regulations. These agreements provide valuable opportunities and experiences for the development and construction of China’s pilot free trade zones. 

Thirdly, the pilot free trade zones serve as testing grounds for the integrated development of domestic and foreign trade. In response to the complex and volatile international environment characterised by China-US trade frictions, the restructuring of global value chains, and rise of anti-globalisation, Opinions of the General Office of the State Council on the Promotion of the Integrated Development of Domestic and Foreign Trade was issued in 2021. This initiative of promoting the integrated development of domestic and foreign trade presents new opportunities for pilot free trade zones. 

Fourthly, the digital economy provides pilot free trade zones with new growth momentum. At a macro level, the emergence and widespread application of new-generation information technologies such as the Internet of Things, 5G, big data, and artificial intelligence herald the digital economy era.  

Building a high-standard global free trade zone network 

Zhu Yongbiao 

Dean, School of Politics and International Relations, Lanzhou University, and Executive Director, Research Centre for the Belt and Road of Lanzhou University 

In the past few years, more and more countries have been actively participating in the construction of a global free trade zone network. China, positioning itself as a key player in building a global network of high-standard free trade zones, has already put together a free trade zone network based on neighbouring countries and extending to the Belt and Road countries, and oriented towards the global market. It is accelerating its efforts in further developing and enhancing free trade zones.  

In recent years, China has signed a number of high-standard free trade agreements. Currently, China has 22 free trade agreements involving 29 countries and regions. Trade with these countries accounts for about one-third of China’s total foreign trade. Among them, the Regional Comprehensive Economic Partnership, which China has signed with the 10 ASEAN member countries, Japan, South Korea, Australia, and New Zealand, is the free trade agreement with the largest population coverage, and economic and trade scale. 

China’s establishment of a global network of high-standard free trade zones has profound implications for the world. Against the backdrop of long-term sluggish global economic growth, as the world’s second-largest economy, it boosts global economic recovery and growth. By establishing this network, China has strengthened economic ties with other countries and regions, facilitated the flow of goods, capital, technology, and personnel, and enhanced the dynamism and momentum of the global economy. 

Amid challenges to economic globalisation, the BRI fosters deeper and broader economic integration globally. Through concrete actions, China has demonstrated firm support for and commitment to maintaining the multilateral trade system and economic globalisation, contributing to the long-term stability and sustainable development of the global economic and trade system. 

China’s construction of a global network of high-standard free trade zones offers a streamlined market access mechanism, extensive economic and trade cooperation, and enhanced commitments to opening up. This initiative not only broadens international markets for Chinese enterprises, but also presents significant opportunities for foreign businesses, products, and services. Participation in this free trade zone network enables countries worldwide to tap into the vast potential of the Chinese market.  

* These views are excerpted from China Economic Times, Dazhong Daily, and Guangming Daily.