Reform of free trade zones to give a boost to national innovation

China Plus Published: 2018-09-29 20:32:57
Share this with Close
Messenger Messenger Pinterest LinkedIn

Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."

Recently, the Comprehensively Deepening Reforms Commission of the Communist Party of China's Central Committee reviewed and approved papers on the topic of promoting high-quality development. Some of the most eye-catching measures for deepening reform and innovation were related to the country's pilot free trade zones. Although some of the specific measures are yet to be announced, there is a lot that we do already know.

Following the 19th National Congress of the Communist Party of China last year, policy tools were developed to grant greater autonomy for the reform of the pilot free trade zones. These tools were designed to help China continue along its 40-year-old journey of reform and opening up. Twelve pilot free trade zones, including those in Shanghai, Guangdong, Tianjin, Fujian, and Hainan, will take the lead in the implementation of these new policy tools. The pilot zones are expected to formulate plans that cover their policy environment, resources, and markets, and that directly promote the development of the local business environment and raise their competitiveness.

Containers are seen at the Yangshan Deep Water Port, part of the Shanghai Free Trade Zone, in Shanghai, China February 13, 2017. [File Photo: VCG]

Containers are seen at the Yangshan Deep Water Port, part of the Shanghai Free Trade Zone, in Shanghai, China February 13, 2017. [File Photo: VCG]

We also know that these pilot free trade zones have been given greater leeway to explore, experiment, and to break the barriers to their development. They will be trailblazers when it comes to China's ongoing reform, as they will be increasingly aligned with international markets, along with global capital and technology. They also act as a strong bridge between China's domestic market and the world economy. The lessons learned through their development will pay dividends for China, and for the world at large.

One of the challenges facing policymakers is how to build a world-class business environment. This includes lowering transaction costs as much as is possible. In the past few years, China's pilot free trade zones have developed good practices that have helped to lower transaction costs, and these practices are gradually being promoted nationwide. This includes the introduction of one-stop shops for businesses engaging in international trade. This means companies can lodge information about maritime and customs matters electronically to one central point of contact. The pilot zones have also made constant innovations in the management of intellectual property rights, talent and land use and by so-doing improved the international competitiveness of these areas.

The bottom line is that China's government is seeking to make the most of the opportunities presented by the development of these pilot areas. China is a vast territory, and there are large disparities in economic and social conditions. The lessons learned in one pilot free trade zone can't simply be applied to the whole country. But they provide policymakers with a sandbox to develop and fine-tune economic innovations that ultimately can help to tackle problems standing in the way of the ongoing reform and opening up of the national economy. They can act as hotbeds of innovation that improve the level of trade facilitation, promote financial innovation in the service of the real economy, and improve the use of the country's talents through a careful and responsible decentralization of power.

Related stories

Share this story on


LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.