CHINA: 7 New Free Trade Zones Made Available to Foreign Investors

Thursday September 1 2016

Chinese authorities have agreed to set up seven new free trade zones (FTZs) in China, bringing the total number to 11. The new FTZs will be located in the provinces of Liaoning, Zhejiang, Henan, Hubei, Sichuan and Shaanxi as well as Chongqing Municipality, according to commerce minister Gao Hucheng.

China`s first FTZ was launched in Shanghai three years ago to test a broad range of economic reforms, including more openness to foreign investment and fewer restrictions on capital flows. In late 2014, Tianjin, Fujian and Guangdong were approved to set up the second group of FTZs.

According to the Commerce Minister, Liaoning Province in northeast China will focus on market-oriented reforms to transform the old industrial base into a more competitive area, while coastal Zhejiang is expected to explore trade liberalization of commodities and improve capacity of global allocation of commodities.

Central China`s Henan will tap its potential in transportation and logistics, and Hubei will build high-tech bases and facilitate the development of the Yangtze River Economic Belt.

Among the successful trials in the first two groups of FTZs has been the introduction of a “negative list,” which specifies investment sectors off-limits to foreign investors and allows industries not on the list to follow the same new investment rules as domestic firms.

The policy has led to a surge in business registrations. In the first half of 2016, a total of 4,923 foreign-funded firms were established in the four FTZs, with investments amounting to Yuan 359 billion.

China is considering expanding the approach nationwide. During its bimonthly session, the National People`s Congress (NPC) Standing Committee considered provisions that may allow foreign and Taiwanese investors to start businesses across the country as easily as in the four FTZs. The Ministry of Commerce said it will work on a nationwide negative list for foreign investment if the top legislature passes the bill.

Please click this link to view our previous article in relation to the easing of foreign investment restrictions in the second group of approved FTZs (four).

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