Shanghai FTZ continues to lead the way a decade later
The China (Shanghai) Pilot Free Trade Zone, which is celebrating its 10th anniversary in September, has maintained strong market vitality, demonstrative leadership, and significant enhancement in serving national strategies, promoting the development of Shanghai and China, the city government said at a news briefing on Friday.
The Shanghai Free Trade Zone, which was unveiled on September 29, 2013, was in itself a first in many aspects. The country now has 21 such zones.
As of the end of 2022, the accumulated actual foreign investment in the Shanghai FTZ had reached US$58.6 billion, accounting for nearly 30 percent of the city's total. In 2022, the regional import and export volume of the zone accounted for approximately 30 percent of the total of all 21 free trade zones in the country.
"The effectiveness of the Shanghai Free Trade Zone's 10 years of reform can be summarized as 'the first in the nation and the benchmark for the whole nation," said Sun Yuanxin, a professor at the Shanghai University of Finance and Economics.
"The first in the nation" is reflected in two aspects: the construction period was the earliest; and the zone took the lead in advancing pioneering and integrated system innovations, such as the management of foreign investment access negative lists, the reform of enterprise registration, the social credit system, administrative service centers, and government interdepartmental information sharing, among others.
"The benchmark for the whole nation" means that the zone has a strong demonstration effect. Among the 302 institutional innovation achievements replicated and promoted at the national levels, half are pioneered and experimented first by Shanghai.
Driven by the Shanghai FTZ, Pudong New Area achieved a regional gross domestic product of 1.6 trillion yuan (US$223 billion), 1.5 times more than in 2013. Pudong now hosts 432 regional headquarters of multinational companies and over 250 foreign-funded research and development centers, accounting for nearly half of the city's total.
"Currently, China is actively promoting accession to high-standard economic and trade agreements such as the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) and the Digital Economy Partnership Agreement (DEPA)," said Shen Weihua, deputy director of the Shanghai Commission of Commerce, on Friday.
"The requirements of relevant rules are highly aligned with the key issues faced by China's reform and opening-up. In the new era, adhering to the integration of international high-standard economic and trade rules and deepening the high-level institutional opening-up is a major mission entrusted to the Shanghai FTZ by the central leadership and the State Council."
The Shanghai FTZ is studying institutional regulations in areas such as service trade, digital trade, intellectual property, government procurement, and post-border management systems in CPTPP and DEPA, and conducting comprehensive research on rules, regulations, management, standards, and other aspects, Shen said.
Shen noted that by implementing the country's first special management measures for foreign investment access (negative list), implementing a filing system for general overseas investment projects, and high-level construction of an "all-in-one counter" for international trade in Shanghai, and other pioneering institutional innovations in the field of investment and trade, the Shanghai FTZ explored paths and accumulated experience for the country to promote high-level openness and comply with international high-level economic and trade rules.
As of the end of last year, Pudong New Area had established nearly 19,000 new foreign investment projects, with a total registered capital of over US$200 billion and nearly US$75 billion in foreign investment.
The scale of goods trade increased from 1.5 trillion yuan in 2013 to 2.5 trillion yuan in 2022, a significant rise over the past decade.
"Through these data, it can be seen that the Shanghai FTZ has effectively played the role of a pilot field for comprehensively deepening reform, and has effectively fulfilled the original mission of demonstration and leadership," Shen said.
Meanwhile, measures to boost financial openness and innovation have been issued continuously since the establishment of the Shanghai FTZ 10 years ago.
Sun Hui, deputy director of the Shanghai Headquarters of the People's Bank of China, said that "a large number of innovative financial systems have been piloted in the Shanghai FTZ and Lingang Special Area."
"A considerable portion of them have been replicated and promoted to other parts of the country," Sun said. "It can be said that the Shanghai FTZ and Lingang Special Area have played a role as pioneers of reform and innovative 'experimental fields' in the financial field.
"For instance, financial innovation based on free trade accounts has played an important role in benefiting enterprises, promoting reform, and preventing risks.
"Secondly, it has played a leading role in cross-border yuan business innovation. Thirdly, the Shanghai free trade zone will continue to deepen the reform of foreign exchange management. The fourth is to create a new high ground for innovation in foreign-related financial services in the Lingang Special Area."
Zhu Zhisong, Party secretary of the Pudong New Area and head of the administrative committee of the China (Shanghai) Pilot Free Trade Zone, concluded that the institutional innovation achievements of the Shanghai FTZ and the Lingang Special Area were mainly reflected in four aspects:
Firstly, they benchmarked international high-standard economic and trade rules and promoted high-level institutional openness.
Secondly, they adhered to the direction of market-oriented reform of factors and enhanced the ability to allocate global resource factors.
Thirdly, they strengthened the government's own reforms and enhanced the modernization level of governance.
Fourthly, they focused on the innovative institutional supply required for industrial development, and enhanced the new driving force for high-quality development.