China's globalization 2.0 version

The Shanghai FTZ strategy is not only a response to the pressing demand for a fresh round of reform, but also the result of pressure from another round of globalization in the post-financial crisis era. In light of the overall international situation, we find current negotiations equally focused on trade and investment, while service trade tends to be tied to an investment agreement more than ever. The gathering pace of the Trade in Services Agreement, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership negotiations is particularly noteworthy.

Because international free trade agreements are now held to a higher standard, the parties involved are required to provide the framework and content, as well as the be-all and end-all of the agreements, with matching professionalism. For example, most TISA negotiations no longer put limits on the ratio of foreign holdings and business scopes in financial, securities and legal services. But China's policies still maintain measures that limit foreign investment in the industries concerned under the framework of multilateral trade adopted by WTO members. This means China is not yet qualified to join TISA.

As for the TPP and TTIP talks, China is excluded for reasons born of international politics. Once concluded, the TPP and TIPP agreements will change world trade rules, standards and structure, and challenge the system of setting those trade rules.

Western developed economies will raise the bar in rules over intellectual property right protection and labor standards, which will no doubt make it harder for other economies to enter the markets of member states.

The same applies to China in the form of growing pressure for competition internationally. Thus, the decision to speed up the establishment of the Shanghai FTZ apparently makes a great deal of sense from the globalization perspective.

The author is a researcher at the Strategic Studies Department of the China International Economic Exchange Center. www.chinausfocus.com