Tianjin free trade zone plan submitted for approval

A plan for a free trade zone (FTZ) in Tianjin has been submitted to the State Council for approval, following the recent approval of Shanghai's free trade zone, the 21st Century Business Herald reported Wednesday.

Several Tianjin-based companies saw their shares shoot up following the news.

Shanghai was given approval on July 3 by the State Council to set up a free trade zone on a trial basis.

Tianjin is planning to upgrade its existing Dongjiang Free Trade Port Zone into an FTZ.

The area is currently a bonded zone in east Tianjin's Binhai New Area, 56 kilometers from the downtown area, according to the 21st Century Business Herald report.

The local government will invest up to 60 billion yuan ($9.73 billion) within five years to reclaim land from the sea and expand the area of the Dongjiang zone by 40 square kilometers, the report said.

An official of the Dongjiang Free Trade Port Zone confirmed with the Global Times on Wednesday that the plan has been submitted to the State Council for approval, but some details still need to be worked out.

"Opening an FTZ in Tianjin after Shanghai marks the further opening-up of China's trade and services sector," Liu Xiao, a macroeconomic analyst at Anbound Consulting, told the Global Times Wednesday.

More bonded areas of port cities are expected to upgrade themselves into free trade zones, Liu said.

A major difference between a bonded area and an FTZ is that a bonded area is customs supervised while an FTZ is not. Bonded areas serve as transit and warehousing centers, while FTZs are more like logistics centers, boosting processing trade and helping drive regional economic growth.

The establishment of an FTZ is expected to boost the local economy, with particular benefits for the financial services sector, shipping and trade businesses, Liu noted.

Creating an FTZ in Tianjin is expected to help in further opening up the market, similar to the effect of the Shanghai FTZ, Liu said.

Following the news about the Tianjin FTZ, several Tianjin companies - including retailer Tianjin Quanyechang Group, logistics service provider CMST Development, and shipping company Tianjin Marine Shipping - saw their share ­prices rise by the 10 percent daily limit Wednesday.

Tianjin Port's share price also rose by 7.98 percent Wednesday.

The favorable market reaction to the Tianjin FTZ was partly influenced by the progress reported with the recently approved Shanghai FTZ.

China's top economic planner, the National Development and Reform Commission, is considering allowing foreign exchanges such as the London Metal Exchange to set up commodities warehouses in the Shanghai FTZ, Reuters reported Wednesday.

Foreign banks will be allowed to set up wholly owned subsidiaries or joint venture banks in Shanghai's FTZ without the long wait normally involved in opening branches or subsidiaries in the mainland, which could help with financial reform, the South China Morning Post (SCMP) reported Tuesday.

Another milestone is that China will soon end a 13-year ban on the production and sale of game consoles in China. Foreign firms like Sony and Nintendo will be allowed to make their products in Shanghai's FTZ, the SCMP reported Wednesday.