Free trade ports to propel China's opening-up

A dozen Chinese municipalities and provinces are at the forefront of attempts to construct free ports, in an effort to advance higher-quality liberalization and to facilitate trade and investment.

The provincial government of Liaoning in Northeast China has officially reported its free port plan to the State Council for approval, according to Economic Information Daily, a newspaper affiliated with State media Xinhua News Agency.

Shandong province, in East China, is also seeking to build a free port in its coastal city of Qingdao, said the newspaper, citing people with direct knowledge of the matter.

A free port is set up within a country's or a region's borders but outside its customs supervision. It is open to all commercial vessels on equal terms. Goods may be unloaded, stored and shipped without payment of customs duties there.

"A free port is not simply an upgraded version of a free trade zone," said Wei Jianguo, vice-president of the China Center for International Economic Exchanges.

"The biggest difference between them is that an FTZ mainly focuses on improving commodity flow, while a free port fully opens up, ranging from the free flow of commodities and currency, to personnel and information."

China's process of opening-up would leap forward with the introduction of free ports, said Wei, who is a former vice-minister of commerce.

"If China were to own more than half of the world's free ports, meaning it had five of the 10 worldwide, it would become a country with a best business environment and a leader in promoting trade facilitation and liberalization."

The process of achieving that goal would take time and involve systemic changes, he added. "Specially designed policies in terms of market access, financial systems and taxation would be needed."

The country will grant more powers to pilot FTZs and explore the opening of free trade ports, according to a key report delivered at the 19th National Congress of the Communist Party of China.

More than 10 coastal locations, including Shanghai, Tianjin, Zhejiang province, and Sichuan province, are racing to secure approval for free port construction.

The new free port within the China (Shanghai) Pilot Free Trade Zone would place emphasis on the development of offshore trade and finance, according to China Securities Journal.

Ministry of Commerce spokesman Gao Feng said the ministry is working with other departments on the building of free ports, and would "follow higher standards and push for more comprehensive and deeper opening-up".

The plans would make the Chinese mainland more competitive with other major shipping hubs, such as Singapore and Hong Kong, he said at a news conference.