The development of serviceindustry has shaken off thebondage of geographicallocations in the informationage. Tianjin FTZ features financialleasing industry, Guangdong FTZinvolves high-end financial service,while Fujian FTZ focuses on tradefinancng cooperation with Taiwan. Ihescenario will probably develop towardshomogeneity of financial servicesand competitions will shift to talentattraction and policy optimization.
FTZ has become a cutting pointfor the further reform and opening-up of China, and the experiment areafor economic structural transition andlowering oftrade costs.
If counting in Shandong Sino-Korea free trade agreement area, therehas been a chain of free trade zonesalong China's eastern coast.
More prominent local charateristics
China's establishment offree tradezones will be inevitable, as there hasbeen free trade zones in neighboringcountries and China cannot afford tobe detached from the free trade zone.There are Incheon and Pushan of SouthKorea in the north, Taiwan facingFujian across the strait and Hong Kongand Singapore in further north.
China will be reduced to low-end trade zone if further reform andopening-up is stopped, as entrepottrade, LCL business, internationalproduct sales and service providingcenter would have been transferred toother regions. China's chain of freetrade zone will enable it to becomepart of East Asian free trade chain andChina will no longer become low-endmanufacturing or service center.
Tianjin, Fujian and Guangdongfollowed the track of Shanghai andshowed their ambitions by promotingmore free trade projects in a widerrange of areas. The development is ofmore local characteristics.
Currently, the negative listsystem used in Shanghai FTZ will bepromoted in the other three free tradezones with different application.
Tianjin FTZ focuses on northeastAsia and development of shippingindustry, with financialleasing havingcompetitive advantage. Fujian FTZwill focus on trade with Taiwan andpromotion of bilateral cooperation.Guangdong FTZ is the second-phaseof Guangdong-Hong Kong-Macaucooperation, aiming to give play toHong Kong's advantages and promotefree trade and high-end cooperationbetween Guangdong and Hong Kong. Information age:unavoidablecompetition among free trade zones
The first step is setting up thefree trade zone, but its future successwill depend on the reform ideas,determination and execution. From thepractice of Shanghai FTZ, the ideais right that the negative list systemseparates the government power andmarket power, to further open up intariff, storage,logistics and services andlower trade costs.
However, there are some parts thatstill need improvement. Take negativelist for example, the current versionis still very complicated and shallpass approval by different ministries.The list is very hard to simplify andsometimes only those insignificant partis simplified. The Shanghai negative listonly reduces the approval ofagriculturalprojects. It is very difficult to shake offchains of development in the servicemarkets that need real opening up.
Some reforms met obstaclesbecause of technical risks. Takefinancial opening-up as example, it isdifficult to define to what extent theopening up will be able to balance themarket efficiency and risks, or whetherpeople could make free transactionswithin a certain amount limit, orwhether the approval system couldbe cancelled in areas oyf cooperateinvestment or debt issuance overseas.There was initiative to open up HongKong direct express in Tianjin, butthis was stopped due to worries aboutuncontrollable financial risks.
The service industry hastranscends geographical locations ininformation age. Tianjin FTZ featuresfinancial leasing industry, GuangdongFTZ involves high-end financialservice, while Fujian FTZ focuseson trade financing cooperation withTaiwan. The scenario will probablydevelop towards homogeneity offinancial services and competitionswill shift to talent attraction and policyoptimization.
Which one of the four free tradezones will stand out as the leadingforce of reform? It will depend onlocal government's market insight andprofessional capacities.
(Author: financial writer)