On March 25, the Chinese Government formally approved plans to establish new free trade zones (FTZs) in the city of Tianjin and the provinces of Fujian and Guangdong, copying the first such zone established in Shanghai in September 2013.
The decision had been anticipated for some time, as the Government had already stated its intention to use the example of the trade, financial, and investment liberalization measures introduced in Shanghai to boost economic growth throughout China.
The Shanghai FTZ has concentrated on financial services and investment, commodities trading, and logistics (particularly international ship management), while offering additional tax incentives for investment and trade together with zero customs duties and import taxes.
The State Council also stated that investment liberalization will be further increased in the Shanghai FTZ, by reducing the “negative list” of those sectors in which foreign investors may not participate.
The new FTZs will benefit from the same eased financial and investment controls and tax incentives. They will focus on other sectors, based on local specialisms and their geographical locations.
For example, the Guangdong FTZ, being close to Hong Kong, will concentrate on the trade and financial sectors, while the Fujian FTZ will do the same but concentrate on Taiwan, its close neighbor. The Tianjin FTZ could play a part in Beijing’s ambition to integrate the capital’s economy with Tianjin’s.