Guangdong studies FTZ affiliation with HK and Macao

Guangdong, one of China's economic powerhouses, is conducting a feasibility study of a free trade zone in cooperation with the neighboring Hong Kong and Macao special administrative regions, insiders said.

They said that officials in the southern province have been urged to apply "immediately" for central government approval to begin construction of the FTZ.

The zone would encompass the Nansha district in Guangzhou, capital of Guangdong, as well as Hengqin island in the Zhuhai special economic zone, the Qianhai area in the Shenzhen SEZ and Guangzhou airport's comprehensive development zone, they added.

Guangdong media reports said the central government may approve the FTZ in early 2014.

In August, the State Council, China's cabinet, gave Shanghai permission to set up the mainland's first FTZ, moving it closer to becoming a global financial, trade and shipping hub to rival other Asian cities such as Hong Kong.

The Shanghai FTZ, covering 28.78 square kilometers, will take more than 10 years to complete. It will be built on the base of Shanghai's existing bonded zones: the Waigaoqiao Free Trade Zone, the Waigaoqiao Free Trade Logistics Park, the Yangshan Free Trade Port Area and the Pudong Airport Comprehensive Free Trade Zone.

In 2010, the State Council designated the Nansha district, Hengqin island and the Qianhai area as three pilot sites for policies to boost regional economic integration in Guangdong.

"Including Guangzhou airport's development zone into an FTZ will be a big plus for Guangdong's application, since Guangzhou Baiyun International Airport has become a global aviation hub," said Lin Jiang, a professor at Guangzhou-based Sun Yatsen University.

Airlines using Guangzhou Baiyun, one of the three busiest airports in the mainland, serve 122 international routes, according to the airport authority.

Lin said Guangdong's FTZ will emphasize the development of the finance, services and free trade sectors. The zone will further upgrade Guangdong's processing industries, which play a big part in the province's economic growth.

Guo Wanda, director of the Shenzhen branch of the China Development Institute, said that Guangdong should expand co-operation with Hong Kong and Macao to build the FTZ, as the SARs' participation offers Guangdong a unique advantage compared with other areas in the mainland.

"Nansha, Qianhai and Hengqin are all adjacent to Hong Kong and Macao and should seek further economic ties with the SARs," he said.

Located at the mouth of the Pearl River, Nansha district covers more than 803 sq km. The Guangzhou government aims to develop the district, a State-level pilot development zone, into a new engine for the city's economic growth.

Nansha could become a crossroads where Hong Kong's financial and technological strengths are used to develop innovative industries, according to Guangzhou Mayor Chen Jianhua.

Qianhai, which covers only 15 sq km, borders Hong Kong. The Shenzhen city government aims to give top priority to Qianhai in the development of service industries, which give Hong Kong its advantages.

Hengqin, which borders Macao, covers 106.4 sq km. It will be well-placed to help Guangdong deepen economic cooperation with Macao and Hong Kong, according to Niu Jing, director of the administrative committee of the Hengqin new area.

Niu said that Hengqin island, which is three times the size of Macao, will give priority to investment from Hong Kong and Macao while also seeking global investment. Hengqin is also expected to be built into an "open" island closely connected to Hong Kong and Macao.

An FTZ is a place where goods can be imported, manufactured and exported without the intervention of customs authorities. Officials said that the Shanghai FTZ will provide world-class transport and communications facilities and a tax-free environment for domestic and foreign enterprises as a major hub of their supply chains in Asia.