Shanghai FTZ seen as doing well

The establishment of the Shanghai free trade zone (FTZ) is to blaze the trail for a new round of China's reform and opening-up but the country should also avoid rushing to approve new free trade zones all at once, an official at a government think tank said Thursday.

The Shanghai FTZ has adopted new measures such as "pre-entry national treatment" for foreign firms and setting up a "negative list" to manage foreign investment, simplifying the procedure for approving outbound investment and exploring a way to invest abroad with China's currency, the yuan, Long Guoqiang, an official with the Development Research Center of the State Council, said at a press briefing in Beijing.

The Shanghai FTZ has operated smoothly in a short span of less than one year and the central government is considering summing up the successful experience of the zone, Long said.

Many local governments are hoping to establish a similar FTZ in their region but the central government needs to approve FTZs in a well-coordinated manner and consider the specific advantages of each region, said Long.

Long's comment came after Zhang Hong, head of finance bureau of Shanghai FTZ, said on Tuesday that Shanghai was working to shorten the negative list for foreign investment to around 130 items from 190 this year to open wider to the world and align the FTZ standard with the global level.

The China (Shanghai) Pilot Free Trade Zone was launched in September 2013 and is seen as a testing ground for financial reforms, commodities trading and logistics.

The zone adopted a "negative list" approach for foreign investment in its free trade zone, which ensures foreign companies can invest without any restriction if a sector is not on the list.

So far, South China's Guangdong Province, North China's Tianjin, Southwest China's Chongqing and Qingdao in East China's Shandong Province have also reportedly applied for setting up a free trade zone.

"No matter how successful the Shanghai free trade zone is, it is neither feasible to launch FTZs nationwide nor proper to choose only rich areas whose potential have already tapped," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times Thursday.

"Places like Guangdong and Tianjin that have similar conditions as Shanghai can be given a green light first, as it would be too late to launch new FTZs after the Shanghai FTZ wraps up the first accounting cycle," Bai said, noting new FTZs should not simply follow in the footsteps of Shanghai but rather cultivate their own regional advantages to maximize the benefits from FTZ status.

China pledged to ease investment restrictions and accelerate construction of free trade zones, according to reform decisions released by the Third Plenary Session of the 18th Communist Part of China Central Committee in November.