Bin Sheng &Birong Hao: The Deepening Reforms of China (Tianjin) Pilot Free Trade Zone

New Mission, New Measures and New Challenges

2018.07.12

Since the operation of China (Tianjin) Pilot Free Trade Zone (TJFTZ), steady progress has been made through various reform measures during the period, achieving our expected objectives. However, TJFTZ is still facing challenges in its construction, development and innovation. For example, it remains to be improved in its opening level, the degree of the institutional innovation, and the coordination between policy-making and implementation as well as the organization and communication among governments at all levels all. In order to carry out the decision and deployment of the Central Committee of CPC and the State Council, and promote balanced economic, political, cultural, social, and ecological progress and coordinated implementation of the Four-Pronged Comprehensive Strategy (Note: This refers to making comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance the law-based governance of China, and strengthen Party self-governance), the State Council printed and distributed “Plans to Further Deepen Reform and Opening-up in Pilot Free Trade Zones (FTZ) of Tianjin” (TJFTZ Reform Plans).


New Mission

Further Opening-up

Creating New Advantages in International Competition

Constructing Beijing-Tianjin-Hebei Collaborative Development Demonstration Zone

TJFTZ Reform Plans is committed to the underlying principle of making progress while keeping performance stable, puts into practice the new development philosophy and focuses on supply-side structural reform. With institutional innovation as its core and risk management as its bottom line, it continues to emancipate the minds, takes practice and piloting as priorities, refers to world advanced rules and gives fuller rein to trade pilot zone. It will promote reform, development and innovation through greater degree of opening-up, and boost the formation of the new all-round opening pattern. It is also required that TJFTZ should explore the new approach and pattern for comprehensively deepening reform and opening-up. Meanwhile, more efforts should be made to clarify the relationship between the government and the market, to build a high-standard investment and trade rules system that is in line with international standards, and to strictly forestall the risks so as to build the free trade pilot zone as a high-level opening platform to serve the construction of “the Belt and Road Initiative” and Beijing-Tianjin-Hebei collaborative development. Thus, we will achieve more replicable and promotable results of institution innovation.

Moreover, TJFTZ Reform Plans also raises new objectives for TJFTZ reform: till 2020, TJFTZ should take the lead in establishing the institutional system in line with international investment and trade rules and forming an institutionalized, internationalized, and facilitated business environment. TJFTZ should also strive to build a new open economic system, create new advantages in international competition, and build a demonstration area for the Beijing-Tianjin-Hebei collaborative development. The reform coordination between TJFTZ and Tianjin should be strengthened through comprehensively implementing eligible piloting reforms in Binhai new area or in Tianjin.


New Measures

Benchmarking to International Advanced Rules

Cultivating New Driving Force

Deepening Collaborative Development

According to the new mission, TJFTZ Reform Plans puts forward three types of reform tasks: (1) benchmarking to international advanced rules and building a new economic system (2) cultivating new driving force and creating new advantages in international competition (3) deepening collaborative development and constructing Beijing-Tianjin-Hebei collaborative development demonstration zone. The three types of reform tasks reflect the characteristics of TJFTZ Reform Plans, which focuses on internationalization, innovation and incubation of emerging industry, and serving for national strategy.

(1) Benchmarking to international advanced rules and building a new economy system. TJFTZ Reform Plans puts forwards eight innovative measures, which are innovations of administrative examination and approval, market access management mode, financial opening and regulation, “single window” of international trade and comprehensive trade supervision, enhancement of international shipping and port service functions, innovation of the distribution mechanism of factor market, and deepening the innovation of post-event supervision system. Requirements and measures featuring internationalization, high-standard and high-level are conducive to building Tianjin as a high-level opening platform, effectively improving public service, and strengthening its attraction to the market majority.

Remarkably, in terms of the improving the international shipping and port service functions, TJFTZ Reform Plans proposes “progressively opening up the inspection of Chinese international navigation vessels”, “supporting the construction of the special channel of international Internet data to connect the free trade pilot zone with the Administration of International Communication Accesses”, “the study on a 15-day visa-free policy for overseas tourist groups entering the port of Dongjiang International Cruise Terminal”, “constructing Tianjin Binhai International Airport to be the designated port for importing automobiles, edible aquatic animals and meat”, “constructing national inspection pilot area” and “implementing classified supervision for cargo situation” and other reform measures.

In terms of facilitating investment and trade, TJFTZ Reform Plans puts forwards “supporting the establishment of foreign-owned or foreign-controlled companies in the free trade pilot zone to extend branch line and general aviation maintenance business”, “piloting domestic and overseas inspection, repair and remanufacturing of high-tech and high value-added projects”, “developing repair business for foreign cruise ships”, “cancelling the time limit of bonded warehousing business for parallel-imported automobile”, etc. These open and transparent market access modes will promote the formation of an institutional, internationalized, and easy business environment.

(2) Cultivating new energy and creating new advantages in international competition. This task includes promoting frontier new technology and industry incubation in the TJFTZ, building new trade industrial clusters, implementing and improving tax policies to promote service trade, and supporting the sound development of financial business that serves the real economy. These measures will help TJFTZ achieve a higher level of comprehensive reform and opening-up, enhance the new advantages in the international competition, construct its capabilities in innovation, global resource allocation, management factor liquidity, integration of global product supply chains and manufacturing  the soft- and-hardware of infrastructure that match the high end of value chain.

Concerning financial and fiscal policies, the spotlights of the plans include: “exploring the trials of comprehensive financial supervision in the CBD of the Binhai New Area”, “supporting the establishment of shipping insurance institutions as local legal entities”, “jointly establishing project companies to start leasing business by uniting no less than two financial leasing companies”, etc., which contribute to improving the financial capability to serve the real economy.

In the aspect of constructing of new trade industrial clusters, TJFTZ Reform Plans also stages out facilitated measures such as “accelerating the trade facilitation of high-end services such as financial insurance, cultural tourism, education and health”, “innovating the development of cross-border e-commerce”, “innovating pilot for parallel-imported automobile, cancelling the time limit for bonded warehousing business of parallel-imported automobile, improving the pricing mechanism of parallel-imported automobile, and promoting the pilot enterprises to apply pre-examination price, aggregating taxation and other facilitation measures for customs clearance”, etc. These measures will enable TJFTZ to achieve a high-level opening, give birth to and incubate a number of frontier emerging industries.

(3) Deepening collaborative development and constructing Beijing-Tianjin-Hebei collaborative development demonstration zone. The TJFTZ is located at the intersection of Beijing-Tinajin-Binhai development axes and Bohai rim economic development belt, which is the core of the Beijing-Tianjin-Hebei industrial pattern axes. Therefore, one of TJFTZ’s missions is to promote the Beijing-Tianjin-Hebei collaborative development. At the same time, we should give full use of the city’s advantages in location, economy, geography, resources, etc., focus on serving the countries along “The Belt and Road”, actively coordinate with the development and construction of Xiong’an New Area, provide platform and channel for connecting it with international market and resources, and promote the upgrading of industrial structure and the development of export-oriented economy in the inland regions.

It is required to give play to the leading role of TJFTZ in deepening its own reform, enhancing the radiation function of ports and airports, optimizing the allocation of regional financial resources, and improving the developing mechanism of coordinated services. Thus, TJFTZ Reform Plans proposes “issuance of local government bonds to domestic and foreign investors in the free pilot trade zone”, “encouraging qualified financial leasing companies and financing leasing companies to use the inter-bank market to issue bonds and assets securitization products to support the construction of key industrial projects in Beijing, Tianjin and Hebei”, etc. The measures will be helpful to serve national strategies and build TJFTZ into a high-level opening platform.


New Challenges

Strengthening Legal Protection

Improving Risk Prevention and Control

Enhancing National Governance

The free trade zone is the important piloting project in promoting the reform and opening-up, and the implementation of TJFTZ Reform Plans will accelerate TJFTZ to achieve its strategic mission. However, there are also challenges in deepening reform.

It is required to strengthen legal protection to deepen the reform of TJFTZ. Strengthening legal protection demands the adjustment of the laws and rules in national level, the enhancement of local autonomous rights of legislation and establishment of judicial protection and rights protection system. Particularly, in the aspects of intellectual property, investment, dispute resolution and commercial arbitration, competition neutrality, etc., positive international experience should be absorbed to catch up with the trend of development. It is also creating beneficial condition for international new rules of trade and investment conducting risk and pressure tests in China. We should take the implementation of the rules in the free trade zone as a transitive arrangement for international commitments, timely summarize China’s interests and provide strategy and modes in future negotiation of multilateral or regional trade agreement.

(2) It is required to take risk management as the bottom line in deepening the reform of TJFTZ. We should intensify innovation in financial opening and regulation, as well as that of in-and-post-event supervision system to support the sound development of financial business in supporting the real economy, and optimize the resource allocation in regional finance. The organization and implementation after the enforcement of financial reform will contribute more to the sustainable and sound development of Tianjin’s economy.

(3) It is required to carry out prompt assessment and promoting of the plan in order to accelerate the formation of systematic reform experience. Since the construction of the free trade zone is to provide replicable and promotable experience for improving the country’s governance system and capability. A whole set of mechanisms on market with systematic and effective management by the government of modern country should be formed through an integrated reform and innovation, including policy transparency mechanism, property rights and contract mechanism, administrative licensing and in- and post-event supervision mechanism, etc.

With the implementation of TJFTZ Reform Plans, TJFTZ will march towards a higher-level and opening platform. Based on the former construction, it will be committed to its new mission, carrying out new measures and confronted with new challenges. What’s more, it will set up an example for governance, test the institution for opening the country, and build highland for regional development.

Author's Profile:

Prof. Bin Sheng: Distinguished Professor of the Yangtze River Scholar of the Ministry of Education; Dean of the College of Economics, Nankai University.

Birong Hao: Doctoral student of Research Institute of International Economy, Nankai University.

Source: Tianjin Daily

Written by Bin Sheng and Birong Hao

Edited by Yuchen Shi and Ruoyan Yan



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